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Daily Review on Markets for Oilseeds and Oils in China--5/8/2019

2019-08-05 www.cofeed.com
Today (Aug. 5th), the market for oilseeds and oils in China is shown as follows:
 
Oilseeds:

Imported soybean: Imported soybean price is steady today, among which Russian soybean is unchanged from last Friday at 4150 yuan/tonne, and Myanmar soybean is at 4670 yuan/tonne, unchanged from last Friday. The imported and distributed soybean in Tianjing port is not a lot. And a re-escalation of U.S.-China trade friction is likely to supportive of China's market when China’s spokesperson at the foreign ministry said Beijing would have to take countermeasures if the U.S. was committed to putting more tariffs on Chinese goods, and according to Bloomberg news, the Chinese government has asked its state-owned enterprises to suspend imports of U.S. agricultural products, people familiar with the situation said,  declining to be identified as they’re not authorized to speak to the media. However, the market is still under the negative situations that it's off-season period and the soybean supply globally is ample. The market is mixed and short-term prices likely maintain stable.

Cottonseed: Cottonseed prices today are partially up 0.04-0.06 yuan/kg with most purchase activities suspending, due to the declining supply of cottonseed, and a certain period before the marketing of new cottonseed. However, the upward potential is curbed because the cottonseed trading is not much as oil mills are reluctant to purchase and some mills mainly use its own stock due to poor crush margin. Short-term price is likely to fluctuate strongly. Buyers are suggested to make a small replenishment upon low price.

Oils: 

Summary: U.S. soybean climbed slightly higher last Friday. And today, China’s yuan has tumbled to the weaker side of 7 per dollar amid the escalation in trade disputes after President Donald Trump ratcheted up trade tensions last week and the offshore exchange rate has even dipped below 7.10, which has significantly increased soybean import cost, and a report by Bloomberg said that the Chinese government has asked its state-owned enterprises to suspend imports of U.S. agricultural products, so oil futures post sharp gains on the Dalian Commodity Exchange. In the spot markets, soybean oil increases by 70-140 yuan/tonne and palm oil by 80 yuan/tonne to see little trading for the moment, in spite of some low-level purchases. Soybean crush fell to 1.49 mln tonnes last week due to swelling soybean meal inventory and the typhoon, and soybean oil inventory declined by 3.6% weekly to 1.388 mln tonnes for quicker deliveries with the start of packing oil stockpiling. In the meantime, palm oil inventory also dropped by 5& weekly to 603,000 tonnes. Therefore, oil market is buoyed to expand gains significantly today. Overall, oil market is predicted to maintain its strong trend before the completion of oil stockpiling, but there may be some fluctuations due to the huge import of soybean and palm oil in the coming two months, so participants need to keep good balance of selling and purchasing. 

Soybean oil: GB Grade I soybean oil is mainly priced at 5,530-5,730 yuan/tonne in domestic coastal areas, up by 100-140 yuan/tonne. (Tianjin 5,540-5,550, Rizhao 5,530-5,540, Zhangjiagang 5,730, and Guangzhou 5,690). 

Palm oil: 24-degree palm oil is mainly priced at 4,500-4,580 yuan/tonne in coastal areas, up by 70-80 yuan/tonne. (Tianjin 4,540-4,550, up 70; Rizhao 4,580, up 70; Zhangjiagang 4,500, up 80; Guangzhou 4,500, up 70; and Xiamen not offered).

Imported rapeseed oil: Imported rapeseed oil rises in price today, of which it settles up 10-30 yuan at 6,960-7,060 yuan/tonne in coastal areas. (Fujian not offered; Guangdong 6,960, up 30; and Guangxi not offered). The import of rapeseed oil and rapeseed from Canada to China is still blocked by pending issues between these two countries, and rapeseed supply will get tightened before a detente. Besides, the market is now busying stockpiling packing oil. Therefore, rapeseed oil market is buoyed to stay strong. But the demand is subject to its large price gap with soybean oil and palm oil, which sent the rapeseed oil inventory to increase to 507,000 tonnes last week. And mills are expected to gradually pick up their operation rates in coming two weeks due to huge soybean import. Rapeseed oil prices will thus find limited upward space. Buyers are suggested to replenish in small batch on the dips and remain cautious in driving up prices.

Cottonseed oil: Cottonseed oil today stays stable with a rise of 50-100 yuan/tonne when operation rates are low;  the busy season of packing-oil restocking ahead of the holiday starts; the soybean import margin greatly increases on Yuan weakness, the onshore breaking through 7 per dollar and the onshore at lowest breaking through 7.10 after the Trump's sudden announcement of additional tariffs and re-escalation of U.S.-China trade conflicts; according to Bloomberg news, the Chinese government has asked its state-owned enterprises to suspend imports of U.S. agricultural products; today oils on DCE surge, spot soybean oil up 70-140 yuan/tonne. However, the market is weighted on by the limited consumption for cottonseed oil as blending oils. Short-term cottonseed oil is likely to fluctuate greatly and buyers had better maintain proper stock level upon low price and be prudent if chasing high.

(USD $1=CNY 6.92)