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Daily Review on Markets for Oilseeds and Oils in China--2/9/2019

Today (Sept. 2nd), the market for oilseeds and oils in China is shown as follows:

Imported soybean: Imported soybean price is steady today, among which Russian soybean is unchanged from last Friday at 4050 yuan/tonne, and Canada soybean is at 4860 yuan/tonne, unchanged from last Friday. China's market is propped up when imported and distributed soybean in Tianjin port is small; demand turns better; US soybean import in short run is restricted amid the uncertainty of US-China trade relationship even if Trump said the talks between Chinese and American trade negotiators scheduled for Washington in September are still on, according to Bloomberg. However, the market is curbed by the ample supply of global soybean with the bumper harvest of South America soybean, which China is active in purchasing. Short-term prices likely maintain stable.

Cottonseed: Xinjiang cottonseed delivered prices today are partially up to 2.68-2.82 yuan/kg, and some inland new cottonseed delivered prices increase by 0.06 yuan/kg, with most purchase activities suspending, due to tight supply of cottonseed, even though the marketing of some new cottonseed. However, the cottonseed trading is not much as the moisture of new cottonseed is high and only a few mills are operating due to poor crush margin. The cottonseed price is likely to keep the strong trend before the massive marketing of new cottonseed. Buyers therefore had better not chase bids high.


Summary: U.S. soybean inched higher last Friday on hope for the restart of China-U.S. trade talks. And on the Dalian Commodity Exchange today, palm oil also posts huge rises due to good export data of Malaysian palm oil, but soybean oil goes weak in fluctuation. The fluctuation is caused by several reasons. Donald Trump said that China and the United States would hold trade talks in Washington in September as said before. Besides, mills raised soybean crush by 11% to 1.90 mln tonnes last week due to quicker soybean meal delivery, so that soybean oil inventory followed to increase by 1.3% to 1.336 mln tonnes. Add to that, the market has slowed down the demand as the restocking will basically complete in mid-September. And in the spot market, palm oil increases by 30-90 yuan/tonne, and soybean oil partially goes down by 10-50 yuan/tonnes in tepid trading, with some low-level purchases. Soybean import cost remains high due to strong premiums of Brazilian soybeans, the sharp devaluation of Chinese yuan and rising ocean freight. And the import margins of South American soybean oil have also seen slight price inversion again. In addition, there may frost speculation on U.S. soybean crops due to planting running later than average. Soybean oil market remains resilient now, and is predicted to follow futures to fluctuate frequently in the short term. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,000-6,220 yuan/tonne in domestic coastal areas, partially down by 10-50 yuan/tonne. (Tianjin 6,000-6,010, Rizhao 6,070, Zhangjiagang 6,220, and Guangzhou 6,100-6,110). 

Palm oil: RBD palm olein is mainly priced at 4,780-4,840 yuan/tonne in coastal areas, down by 60-70 yuan/tonne. (Tianjin not offered; Rizhao not offered; Zhangjiagang 4,840, down 60; Guangzhou 4,780, down 70; and Xiamen not offered).

Imported rapeseed oil: Imported rapeseed oil rises in price today, of which it settles up 30-50 yuan at 7,500-7,620 yuan/tonne in coastal areas. (Fujian 7,500, up 50; Guangdong not offered; and Guangxi 7,550, stable). The import of Canadian rapeseed oil and rapeseed is still disrupted by pending issues between China and Canada, so domestic rapeseed supply is getting tightened tightened before a thaw in bilateral relations. As a result, rapeseed oil also fell by 5% to 422,000 tonnes last week, which has helped buoy the market to go strong. But the demand is still influenced by its huge price spread with soybean oil, and the market is about to complete restocking for the festival in mid-September. Buyers are suggested not to chase up prices higher. 

Cottonseed oil: Cottonseed oil today stays stable with a drop of 20 yuan/tonne for some prices when demand slow down with the ending of the restocking in the middle of September; the cottonseed oil consumption as blend oil is not much; today soybean oil on DCE fluctuates with weak trend, and spot soybean oil partially lowers 10-50 yuan/tonne. However, the decline is limited by the low operation rate and stock. With the marketing of some new cottonseed, cottonseed oil is likely to move sideways before the massive marketing. Buyers are suggested to take a hand-to-mouth buying strategy.

(USD $1=CNY 7.09)