Today is 05/26/2020

China Soybean Weekly Report -- As of August 23rd, 2019


Price: The demand and traders' delivery pace of imported and distributed soybean are both at an average level. And the soybean supply globally is ample due to the bumper crop of South America soybean, which China is active in purchasing, with a total of 24-25 cargoes as of this Thursday.  All these are negative to China's market. However, the small amount of imported and distributed soybean is supportive of the market. Moreover, White House economic adviser Larry Kudlow said the deputies' call with Chinese officials on Wednesday was quite constructive and the deputies had agreed to another conference call. There are still some uncertainties over US-China trade conflicts, and US soybean import in the short run is restricted. Short-term prices likely maintain stable. Buyers should pay attention to news about the trade war and the domestic demand.

Crush: This week (Aug. 17th-23rd), the operation rate has risen as expected since mills are active in crushing due to somewhat eased soybean meal inventory and handsome crush margins. Thereby, soybean crush totals 1,704,800 tonnes (meal 1,346,792 tonnes and oil 323,912 tonnes), an increase of 126,400 tonnes by 8% from 1,578,400 tonnes last week. Meanwhile, the operation rate (capacity utilization) is 47.72%%, up 3.54 percentage points from 44.18% last week. Soybean crush is predicted to continue its growth to around 1.82 mln tonnes next week and to around 1.85 mln tonnes the following week. 

Soybean crush nationwide is estimated at 7.19 mln tonnes in August at current utilization rate, above the 6.70 mln tonnes in July yet below 8.25 mln tonnes of the corresponding period last year. 

As of this week, soybean crush nationwide totals 75,540,115 tonnes in the crushing year of 2018/19 (from October, 2018), down 4,442,375 tonnes by 5.55% from 79,982,490 tonnes of the same period last year. In 2019 (from Jan. 1st, 2019), national soybean crush amounts to 52,388,715 tonnes, down 3,193,055 tonnes by 5.74% from 55,581,770 tonnes of the corresponding period in 2018. 


Inventory: The inventory has slightly increased this week, as mills have started unloading soybean cargoes delayed by the typhoon in the previous week. On the week as of August 23rd, imported soybean inventory is 5,390,400 tonnes in main domestic coastal oil mills, up 353,800 tonnes by 7.02% from 5,036,600 tonnes last week yet down by 20.05% from 6,742,700 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 31 cargoes with 2.008 mln tonnes this week, a total of 86 cargoes with 5.523 mln tonnes for August so far. The import is predicted to be 141 cargoes with 9.1 mln tonnes for August, 8.60 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. 19-Aug. 23, 2019), spot soybean meal further rises. As of this Friday, the price is 2890-2970 yuan/tonne in coastal areas, up by 60-110 yuan/tonne from last week.

Inventory: The inventory has continued decreasing this week on the better trading and quick delivery. The total trading is up by 33.15% at 1,245,400 tonnes as of this Friday since the futures market is strong and downstream buyers are active in stocking up for the Mid-autumn Festival. On the week as of August 23rd, soybean meal inventory in main domestic coastal oil mills totals 731,700 tonnes, down 110,400 tonnes by 13.11% from 842,100 tonnes last week and by 40.19% from 1,223,400 tonnes of the corresponding period last year. As soybean crush will increase to around 1.82 mln tonnes and 1.82 mln tonnes in the coming two weeks, soybean meal inventory is predicted to slow down its declines.

III.Soybean Oil

Price: This week (Aug. 19-Aug. 23, 2019), soybean oil is mixed. Main prices for GB grade-one soybean oil in coastal areas are 6000-6260 yuan/tonne, fluctuating by 10-40 yuan/tonne.

Inventory: Soybean oil inventory has further declined this week due to quick delivery this week, as the market is still stocking up in the run up for the Mid-autumn Festival and National Day and some mills are still performing the contracts signed before. On the week as of August 23rd, the inventory has totaled 1,319,500 tonnes, down 12,100 tonnes by 0.91% from 1,331,600 tonnes last week, down 140,500 tonnes by 9.62% from 1,460,000 tonnes last month, and down 299,900 tonnes by 18.47% from 1,618,500 tonnes of the corresponding period last year. And the five-year average at the same period is 1,321,800 tonnes.