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China Soybean Weekly Report -- As of August 16th, 2019

2019-08-20 www.cofeed.com
I.Soybean

Price: The market is supported by the small amount of imported and distributed soybean and the short-term US soybean import restriction due to the uncertainties over trade war when U.S. chief trade negotiators hold phone talks on Tuesday, agreeing to hold another phone conversation in two weeks; US announce that the 10% tariff should be delayed to December 15 for certain articles from China; White House trade adviser said there are still seven structural issues the U.S. needs to work out with China, according to Bloomber and the time of September trade talk has not been confirmed. However, the bumper crop harvest in South America and huge global supply still curbs China's market. Short-term prices likely maintain stable. Buyers should pay attention to news about the trade war and the demand.






Crush: This week (Aug. 10th-16th), an unexpected cut in operation rate has occurred as some mills are still confronted with swelling soybean meal inventories and some have made an emergency shutdown by typhoon Lekima. Thereby, soybean crush totals 1,578,400 tonnes (meal 1,246,936 tonnes and oil 299,896 tonnes), a reduction of 79,200 tonnes by 4.77% from 1,657,600 tonnes last week. Meanwhile, the operation rate (capacity utilization) is 44.18%, down 2.21 percentage points from 46.39% last week. As mills plan to boost their operation rate a little bit, soybean crush is predicted to increase to around 1.62 mln tonnes next week and to around 1.68 mln tonnes the following week. 

As of this week, soybean crush nationwide totals 73,835,315 tonnes in the crushing year of 2018/19 (from October, 2018), down 4,231,475 tonnes by 5.42% from 78,066,790 tonnes of the same period last year. In 2019 (from Jan. 1st, 2019), national soybean crush amounts to 50,683,915 tonnes, down 2,982,155 tonnes by5.55% from 53,666,070 tonnes of the corresponding period in 2018. 

 

Inventory: The inventory continues to reduce this week as mills just put a small quantity into storage. On the week as of August 16th, imported soybean inventory is 5,036,600 tonnes in main domestic coastal oil mills, down 460,600 tonnes by 8.06% from 5,497,200 tonnes last week and down by 28.98% from 7,092,000 tonnes of the same period last year. As soybean import estimate is pegged at a high level in August and September, its supply will be not a problem for the moment. 



Import and its outlook: According to Cofeed, imported soybean is 24 cargoes with 1.532 mln tonnes this week, a total of 57 cargoes with 3.646 mln tonnes for August so far. The import is predicted to be 141 cargoes with 9.1 mln tonnes for August, 9.0 mln tonnes for September, 8.0 mln tonnes for October, and 7.50 mln tonnes for November. Statistics will be updated every week on account of variable and unstable buying.  


II.Soybean Meal

Price: This week (Aug 12-16, 2019), spot soybean meal prices turn to move sideways. As of this Friday, the price is 2830-2890 yuan/tonne in coastal areas, fluctuating in the range of 10-40 yuan/tonne from last Friday.





Inventory: The inventory reduces fractionally this week on a further decline in soybean crush. On the week as of August 16th, soybean meal stockpiles in main domestic coastal oil mills total 842,100 tonnes, down 16,900 tonnes by 1.97% from 859,000 tonnes last week and by 33.37% from 1,264,000 tonnes of the corresponding period last year. As the crush will stay at relatively low levels of around 1.62 mln tonnes and 1.68 mln tonnes in the coming two weeks, soybean meal inventory is predicted to decrease slightly.



III.Soybean Oil

Price: This week (Aug 12-16, 2019), soybean oil rises for six consecutive weeks. As of this Friday, main prices for GB grade-one soybean oil in coastal areas stay at 6000-6260 yuan/tonne, up 120-290 yuan/tonne.





Inventory: On the week as of August 16th, the inventory has totaled 1,331,600 tonnes, down 44,800 tonnes by 3.25% from 1,376,400 tonnes last week, down 98,400 tonnes by 6.88% from 1,430,000 tonnes last month, and down 261,900 tonnes by 16.44% from 1,593,500 tonnes of the corresponding period last year. And the five-year average at the same period is 1,310,200 tonnes.