Today is 07/08/2020

China Soybean Weekly Report -- As of September 20, 2019


Price: Soybeans in the new season have been on sales now, so some holders are clearing their stockpiles, which is bearish to domestic market. Meanwhile, the USDA confirmed total sales of 720,000 tonnes of soybeans to China in three separate announcements on last Friday, Monday and Tuesday. And the vice-ministerial level of trade talks between China and the US held in Washington this week, which would pave way for the high-level negotiations in Washington in mid-October. Market participants predict that China will make more goodwill purchases ahead of October trade talks. Short-term market is predicted to stay stable with slight declines, and participants can follow up trade talk progress and domestic demand. 

Crush: This week (Sept. 14th-20th), the operation rate has gone up for slightly smaller soybean meal inventory, fair crush margins and higher demand as some downstream buyers are replenishing in advance for National Day holidays. Soybean crush at domestic mills totals 1,829,000 tonnes (meal 1,444,910 tonnes and oil 347,510 tonnes), an increase of 29,300 tonnes by 1.62% from 1,799,700 tonnes last week. Meanwhile, the operation rate (capacity utilization) is 50.55%, up 0.81 percentage points from 49.74% last week. Soybean crush is expected to be little changed next week and to sharply fall that following week due to the National Day holiday, of which it will be at around 1.83 mln tonnes and 1.36 mln tonnes, respectively.

Soybean crush nationwide is estimated at 7.61 mln tonnes in September at current utilization rate, slightly above the 7.57 mln tonnes in August yet below 7.97 mln tonnes of the corresponding period last year. 

As of this week, soybean crush nationwide totals 82,882,365 tonnes in the crushing year of 2018/19 (from October, 2018), down 4,456,235 tonnes by 5.10% from 87,338,600 tonnes of the same period last year; in 2019 (from Jan. 1st, 2019), national soybean crush amounts to 59,730,965 tonnes, down 3,206,915 tonnes by 5.09% from 62,937,880 tonnes of the corresponding period in 2018, according to Cofeed. 


Inventory: Imported soybean inventory has continued to decrease this week as soybean crush is raised to 1.82 mln tonnes. On the week as of September 20th, imported soybean inventory is 4,721,800 tonnes in main domestic coastal oil mills, down 615,300 tonnes by 11.53% from 5,337,100 tonnes last week and down by 34.75% from 7,237,000 tonnes of the same period last year. The inventory may also reduce next week as soybean crush is predicted to be about 1.83 mln tonnes, but it may mount slightly higher after the National Day holiday, during which operation rates will be cut down sharply. 

Import and its outlook: According to Cofeed, imported soybean is 28 cargoes with 1.8249 mln tonnes this week, a total of 71 cargoes with 4.6444 mln tonnes for September so far. The import is predicted to be 8.022 mln tonnes for September, 7.50 mln tonnes for October, 7.90 mln tonnes for November and 7.10 mln tonnes for December. Statistics will be updated every week on account of variable and unstable buying.  

II.Soybean Meal

Price: This week (Sept. 16th-20th), spot soybean meal prices slight rebound. As of this Friday, the price is 2,880-2,990 yuan/tonne in coastal areas, up by 10-30 yuan/tonne from last week.

Inventory: With the growth in soybean crush, soybean meal inventory also posts rises. On the week as of September 20th, the inventory totals 766,300 tonnes, up 24,300 tonnes by 3.27% from 742,000 tonnes last week yet down by 11.55% from 866,400 tonnes of the corresponding period last year. Downstream buyers this week will make final preparations for the holidays, so the inventory is predicted to only have a small increase. 

III.Soybean Oil

Price: This week (Sept. 16th-20th), soybean oil extend its losses overall. As of this Friday, main prices for GB grade-one soybean oil in coastal areas stay at 5,950-6,210 yuan/tonne, mostly down 20-50 and some up 20 yuan/tonne.

Inventory: In addition to the pickup in operation rate, the market is in gloomy demand with the end of the restocking for packing oils. Soybean oil inventory thus increases this week amid a moderate delivery pace. On the week as of September 20th, the commercial inventory has totaled 1,348,050 tonnes, up 17,390 tonnes by 1.31% from 1,330,660 tonnes last week, up 22,750 tonnes by 1.72% from 1,325,300 tonnes last month, yet down 271,950 tonnes by 16.79% from 1,620,000 tonnes of the corresponding period last year. And the five-year average at the same period is 1,298,900 tonnes.