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Daily Review on Markets for Oilseeds and Oils in China--18/9/2019

Today (Sept. 18th), 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 3990 yuan/tonne, and Canada soybean is unchanged from yesterday at 4930 yuan/tonne. According to USDA notice, China bought 204,000 tonnes of US soybeans on Sept. 13, and 256,000 tonnes on Sept. 16, and 260,000 tonnes on Sept. 17, totally 720,000 tonnes. These three lots are free from additional tariffs. The increase of imported US soybean is bearish to domestic market. However, an insufficient inventory of distributed soybean is supportive of China's market. Short-term prices likely maintain stable.

Cottonseed: Cottonseed prices today stable with a drop of 0.02~0.04 yuan/kg and most purchase activities suspending when the new cottonseed is small in quantity and high in price. The down stream takes wait-and-see attitude and oil mills are not eager to purchase. However, the price decline pace is limited by the tight supply before the marketing of new cottonseed. The price is expected to fall a bit in the wake of marketing. Buyers should stay on the sideline for now.


Summary: Crude oil retreated as Saudi Arabia might restore its oil production at a quicker pace than expected, and the weather was forecast to be favorable in the US Midwest, so U.S. soybeans fell last night, and oil futures also drop on the Dalian Commodity Exchange today. In the spot markets, soybean oil declines 20-50 yuan/tonne and palm oil dips by 80-100 yuan/tonne in tepid trading. The vice-ministerial level of trade talks between China and the US are going to be held in Washington in the next two days, which will pave way for the high-level negotiations in Washington in mid-October. White House economic adviser Larry Kudlow has made upbeat comments for the prospect of trade talks. Besides, the USDA confirmed total sales of 720,000 tonnes of soybeans to China in three separate announcements on last Friday, Monday and Tuesday. The detente in trade relations between China and US is negative to domestic oil market. In the meantime, oil market is in huge supply with at least 10 cargoes of palm oil bought by Chinese importers yesterday due to its import margins. This round of peak demand before holidays is almost over, and the next round will not start until December. Therefore, oil market now is capped by bearish fundamentals. This round of price rises in oil market is mainly buoyed by the spike in crude oil prices, so domestic oil prices today also fall in response. Buyers can wait for the moment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,060-6,320 yuan/tonne in domestic coastal areas, down by 20-50 yuan/tonne. (Tianjin traders 6,060-6,070, Rizhao traders 6,120, Zhangjiagang traders 6,320, and Guangzhou traders 6,210). 

Palm oil: RBD palm olein is mainly priced at 4,880-4,990 yuan/tonne in coastal areas, down by 80-110 yuan/tonne. (Tianjin traders 4,900-4,910, down 80; Rizhao traders 4,990, down 110; Zhangjiagang traders 4,950, down 80; Guangzhou traders 4,880, down 110; and Xiamen 4,920, down 80).

Imported rapeseed oil: Imported rapeseed oil steps down in price today, of which it settles down 30-40 yuan/tonne at 7,370-7,470 yuan/tonne in coastal areas. (Fujian 7,370, down 30; Guangdong not offered; and Guangxi 7,470). The demand for rapeseed oil is influenced by its bigger price gap with soybean oil and palm oil. Moreover, palm oil arrivals will be substantial in September and October, with at least 10 cargoes bought by Chinese importers yesterday due to its import margins. At the same time, the peak demand in preparation for holidays has been over. The supply and demand is now moving toward a bearish stance. Besides, following the detente in China-US relationship, the market also expects some progress between China and Canada. Due to the extradition hearing against HUAWEI Meng Wanzhou on September 23 and the upcoming high-level trade negotiations, short-term rapeseed oil market is likely to fluctuate frequently at the high level, but the range will be small. Buyers can wait or keep light stocks. 

Cottonseed oil: Cottonseed oil today stays stable due to the low operation rate and almost non-inventory. However, the market is dragged down when the small-packing oil restocking is about to end; the consumption of cottonseed oil for blending is not a lot; and today soybean oil on DCE stops rising and falls back, while spot soybean oil and palm oil are down 20-50 yuan/tonne and 80-110 yuan/tonne respectively. Cottonseed oil is likely to see stay stable with fluctuations before the massive marketing of new cottonseed, and then see a proper drop after the massive marketing. Buyers can take a hand-to-mouth buying strategy.

(USD $1=CNY 7.07)