Today is 08/09/2020

Daily Review on Markets for Oilseeds and Oils in China--3/9/2019

Today (Sept. 3rd), 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 yesterday at 4050 yuan/tonne, and Canada soybean is unchanged from yesterday at 4860 yuan/tonne. China's market is propped up when imported and distributed soybean in Tianjin port is small; demand turns better. Moreover, US soybean import in short run is restricted when the trade war is unlikely to end in a short run even if the talks between Chinese and American trade negotiators scheduled for Washington in September are still on, and it's expected that a deal may be reached. However, the bumper crop harvest in South America and huge global supply still curbs China's market. Short-term prices likely maintain stable.

Cottonseed: Cottonseed prices today are partially stable 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 operation rate are low on 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: On the Dalian Commodity Exchange today, soybean oil falls moderately and palm oil has obviously narrowed down gains in spite of further rises, as the market is expecting China-U.S. trade talks which may be held as scheduled in Washington in September. In the spot markets, soybean oil drops by 20-50 yuan/tonnes and palm oil partially fluctuates by 10-30 yuan/tonne in tepid trading. With improved soybean meal deliveries, mills substantially raised their soybean crush to a high level of 1.90 mln tonnes last week, a weekly increase of 11%. In addition, the market is about to finish restocking edible oils in mid-September, and has nearly completed packing oil buying for the festival. Soybean oil inventory thereby increased by 1.3% weekly to 1.336 mln tonnes last week. Soybean oil market thus continues to fall under pressure. However, there is still huge uncertainty in trade frictions between China and the United States. Moreover, the market is worries about tight supply of fourth-quarter South American soybeans, whose 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. Short-term soybean oil market remains resilient and is predicted to follow futures to fluctuate frequently at the high level, and the downside potential may be slightly enlarged after the completion of restocking or the emergence of sales pressure of U.S. soybeans. Market participants are suggested to remain cautious but not to chase up prices excessively. 

Soybean oil: GB Grade I soybean oil is mainly priced at 5,990-6,200 yuan/tonne in domestic coastal areas, down by 20-50 yuan/tonne. (Tianjin 5,990-6,000, Rizhao 6,050, Zhangjiagang 6,200, and Guangzhou 6,100-6,110). 

Palm oil: RBD palm olein is mainly priced at 4,860-4,950 yuan/tonne in coastal areas, partially fluctuating by 10-30 yuan/tonne. (Tianjin 4,900-4,910; Rizhao 4,950, down 20; Zhangjiagang 4,930, up 30; Guangzhou 4,860, down 10; and Xiamen not offered).

Imported rapeseed oil: Imported rapeseed oil declines in price today, of which it settles down 30-50 yuan at 7,420-7,520 yuan/tonne in coastal areas. (Fujian 7,420, down 50; Guangdong not offered; and Guangxi 7,520, down 30). While mills are active in raising their operation rates, the demand for rapeseed oil is subject to its enlarged price gap with soybean oil and palm oil and the market has slowed down its demand as it is about to complete restocking edible oils in mid-September, especially small packing oil restocking that is almost coming to an end. This is bearish to the marker. But rapeseed supply will get tightened in later period as there is no much practical improvement in relationship between Beijing and Ottawa, which may help limit price declines. The overall trend is predicted to hover at the high level, and buyers can wait or buy on immediate demand. 

Cottonseed oil: Cottonseed oil today stays stable with a drop of 50 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 mildly fall back, and spot soybean oil lowers 20-50 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 can just wait on the sidelines.

(USD $1=CNY 7.09)