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China Soybean Weekly Report -- As of September 27, 2019

2019-09-30 www.cofeed.com

I.Soybean

Price: The market is bearish when new soybean is marketing and some traders with many goods are active in sale; at the beginning of this week Xinhua news reported that China would support related companies to purchase more US soybean, pork and other US agricultural products, and the Customs Tariff Commission would apply tariff exemption on those purchases; Bloomberg reported Trump said trade deal with China could happen sooner than people think; more US soybean would be imported if the US-China high-level trade consultation at the beginning of October goes well. With the domination of bearish factors, short-term prices likely maintain stable with weak momentum. Buyers should pay attention to news about the trade war and the domestic demand.





Crush: This week (Sept 21st-27th), downstream buyers have nearly completed their replenishment now that it is just one week left ahead of the National Day, so mills have slightly reduced their operation rates. Soybean crush at domestic mills totals 1,815,150 tonnes (meal 1,433,968 tonnes and oil 344,878 tonnes), down 29,300 tonnes, or 1.62%, from 1,829,000 tonnes last week. Meanwhile, the operation rate (capacity utilization) is 50.07%, down 0.48 percentage points from 50.55% last week. Soybean crush will drastically drop next week as mills in Shandong and North China cut down their operation rates due to the holidays and the parade, so the crush is expected to be around 1.11 mln tonnes next week, but it will increase to 1.43 mln tonnes that following week. 

Soybean crush nationwide is estimated at 7.45 mln tonnes in September at current utilization rate, below the 7.57 mln tonnes in August and 7.97 mln tonnes of the corresponding period last year. 

As of this week, soybean crush nationwide totals 84,697,515 tonnes in the crushing year of 2018/19 (from October, 2018), down 4,635,885 tonnes, or 5.18%, from 89,333,400 tonnes of the same period last year; in 2019 (from Jan. 1st, 2019), national soybean crush amounts to 61,546,115 tonnes, down 3,386,565 tonnes, or 5.21%, from 64,932,680 tonnes of the corresponding period in 2018, according to Cofeed. 



Inventory: Imported soybean inventory continues to decrease this week, as mills keep soybean crush at a high level of over 1.80 mln tonnes. In the week as of September 27th, imported soybean inventory is 4,097,400 tonnes in main domestic coastal oil mills, down 624,400 tonnes by 13.22% from 4,721,800 tonnes last week and down by 43.84% from 7,296,600 tonnes of the same period last year. The inventory may increase slightly after the National Day holiday, during which mills will slash the crush to below 1.10 mln tonnes. 



Import and its outlook: According to Cofeed, imported soybean is 30 cargoes with 1.932 mln tonnes this week, a total of 103 cargoes with 6.6944 mln tonnes for September so far. The import is predicted to be 123 cargoes with 8.022 mln tonnes for September, 7.50 mln tonnes for October, 7.40 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. 23- 27, 2019), spot soybean meal see a small rise with fluctuations. As of this Friday, the price is 2880-2990 yuan/tonne in coastal areas, mostly up by 10-30 yuan/tonne from last week.





Inventory: The inventory has fractionally declined this week on quick delivery, as some downstream companies are stocking up for the National Day holiday, which is one week left to come. In the week as of September 27th, the inventory totals 674,300 tonnes, down 92,000 tonnes by 12.01% from 766,300 tonnes last week and down by 23.94% from 886,600 tonnes of the corresponding period last year. As most mills will halt production during the holiday next week, the inventory is predicted to continue to drop accordingly. 



III.Soybean Oil

Price: This week (Sept. 23-27, 2019), soybean oil see a three consecutive decline. As of this Friday, main prices for GB grade-one soybean oil in coastal areas stay at 5850-6050 yuan/tonne, down 60-160 yuan/tonne.





Inventory: Mills have just reduced their crush for a little bit, buyers have already finished replenishment of packing oils with only some demand for bulk oils, and mills are not in rapid delivery, so soybean oil inventory continues to increase this week. On the week as of September 27th, the commercial inventory has totaled 1,349,150 tonnes, up 1,100 tonnes from 1,348,050 tonnes last week, up 24,150 tonnes by 1.82% from 1,325,000 tonnes last month, yet down 343,150 tonnes by 20.28% from 1,692,300 tonnes of the corresponding period last year. And the five-year average at the same period is 1,327,200 tonnes.