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Daily Review on Markets for Oilseeds and Oils in China--6/8/2019

2019-08-06 www.cofeed.com
Today (Aug. 6th), 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 at 4150 yuan/tonne from yesterday. China's market is propped up when imported and distributed soybean in Tianjin port is small and US soybean import is restricted due to the re-escalation of U.S.-China trade conflicts as China said it would temporarily not rule out the possibility of levying additional tariffs on imported U.S. farm produce with deals made after Aug. 3, and related Chinese companies have halted purchases of U.S. farm produce, according to the National Development and Reform Commission and the Ministry of Commerce. 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 stable 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 greatly. Buyers are suggested to make a small replenishment upon low price.

Oils: 

Summary: U.S. soybean closed with gains last night underpinned by concerns over forecasts of adverse crop weather of lower temperatures and more rains in the Midwest that could potentially curb yields. However, China’s Ministry of Commerce confirmed that Chinese enterprises had halted purchases of U.S. agricultural products and China would temporarily not rule out the possibility of levying additional tariffs on imported U.S. agricultural products with deals made after Aug. 3. In addition, after the yuan falling below 7 against the dollar on Monday, said in a report by Bloomberg, the U.S. Treasury Department labeled China a currency manipulator, which has intensified trade tensions between these two countries, and the significant depreciation in yuan has also enhanced soybean import cost. Therefore, oil futures continue to climb higher on the Dalian Commodity Exchange today, but there are no huge gains compared to the previous close. The price rises are also narrowed down in the spot market, with soybean oil up by 20-30 yuan/tonne and palm oil by 10 yuan/tonne partially in tepid trading. Soybean crush fell to 1.49 mln tonnes last week due to swelling soybean meal inventory and the typhoon, while soybean oil inventory declined by 3.6% weekly to 1.39 mln tonnes due to quick deliveries under the stockpiling for packing oil. Meanwhile, palm oil inventory also dropped by 5% weekly to 603,000 tonnes. Therefore, domestic oil spot market is pushed to extend its upward trend. Overall, oil market is predicted to maintain its strong trend before the completion of oil stockpiling, but buyers with adequate stockpiles had better not chase up prices for the moment on account of huge  soybean and palm oil imports in the coming two months and technical corrections after price rises. 

Soybean oil: GB Grade I soybean oil is mainly priced at 5,580-5,750 yuan/tonne in domestic coastal areas, up by 20-30 yuan/tonne. (Tianjin 5,580-5,590, Rizhao 5,570, Zhangjiagang 5,750, and Guangzhou 5,710). 

Palm oil: 24-degree palm oil is mainly priced at 4,490-4,560 yuan/tonne in coastal areas, a partial rise of 10 yuan/tonne. (Tianjin 4,550-4,560, up 10; Rizhao not offered; Zhangjiagang 4,500, flat; Guangzhou 4,490, flat; and Xiamen not offered).

Imported rapeseed oil: Imported rapeseed oil rises in price today, of which it settles up 20-30 yuan at 6,970-7,120 yuan/tonne in coastal areas. (Fujian not offered; Guangdong 6,970, up 30; and Guangxi 7,120, up 20). U.S. soybean rose last night underpinned by concerns over forecasts of adverse crop weather of lower temperatures and more rains in the U.S. Midwest that could potentially curb yields. However, China’s Ministry of Commerce confirmed that Chinese enterprises had halted purchases of U.S. agricultural products and China would temporarily not rule out the possibility of levying additional tariffs on imported U.S. agricultural products with deals made after Aug. 3. In addition, after the yuan falling below 7 against the dollar on Monday, said in a report by Bloomberg, the U.S. Treasury Department labeled China a currency manipulator, which has intensified trade tensions between these two countries. And the significant depreciation in yuan has also enhanced the import cost of soybean, rapeseed and rapeseed oil, etc.. Rapeseed oil futures extend gains on the Zhengzhou Commodity Exchange today. Besides, rapeseed supply may get tightened due to the unsettled issues between China and Canada, and the stockpiling for packing oil in the run up to the festivals has already got started. Therefore, rapeseed oil market is buoyed to stay relatively strong. But the demand for rapeseed oil is severely cut by its enlarged price spread with soybean oil and palm oil, whilst oil is in adequate supply in China at the moment, and soybean import is huge later; thus, rapeseed oil prices may have limited upward impetus. 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 rate is low; the busy season of packing-oil restocking ahead of the holiday starts; China said it would temporarily not rule out the possibility of levying additional tariffs on imported U.S. farm produce with deals made after Aug. 3, and related Chinese companies have halted purchases of U.S. farm produce, according to the National Development and Reform Commission and the Ministry of Commerce; US declares China a currency manipulator after the yuan breached the key 7-per-dollar level yesterday, according to Bloomberg; today oils on DCE further lift and spot soybean oil goes up 20-30 yuan/tonne on the rising tension of US-China trade relationship and the increase of soybean import cost due to the yuan weakness. 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 6.97)