USDA supply and use report: The October report is bullish to soybean market. In the report, the production of US soybeans in 2019/20 was below the market estimate due to lower planted area and yield, while the ending stocks also came below the market estimate due to higher crushings. 

MPOB: The report made little difference to the market, as the growth in the monthly ending stocks came below the estimate due to lower production.

Domestic market supply and demand: The demand for soybean oil rose ahead of the Mid-autumn Festival and the National Day holiday, in addition to its substitute for rapeseed oil and the withdrawal of palm oil in northern markets. Soybean oil market was trading very well at that period. While soybean meal will see lower demand late November when farmers will sell out a lot of pigs and cattle for the Spring Festival, soybean oil will welcome its hot demand in November and December. The demand for soybean oil is expected to gradually post a picture where it is strong in South China and weak in the North, which can be attributed to the regional difference in the demand for soybean meal, soybean supply and the African swine fever.

Soybean oil will hopefully trade well only after late October, although it saw huge purchases this Wednesday. Its stocks may be accumulating with higher soybean crush this week and next week. 

MPOB: The report should have been bullish due to lower ending stocks, but futures remain little changed on weak October exports. Usually, local production in Malaysia will keep high in October and November, so the stocks will accordingly increase. In China, palm oil stocks will also be a burden due to higher imports since late September and limited demand under cooler weather. Domestic rapeseed cargoes are basically from Australia after October, which can help maintain the operation rates in oil mills, and the supply is getting tightened. But the demand for rapeseed oil is also dismal, so the stocks are increasing fractionally. Both soybean oil and rapeseed oil are likely dragged down by palm oil, because importers will make purchases once there are margins, which will offset some shortages of soybean oil and rapeseed oil. 

Although the growth of palm oil stocks in Malaysia was smaller than what the market expected, the truth is that the stocks were actually rising. An agency estimated that the production would increase to 1.90-1.91 mln tonnes in October, and after India adjusted its duties, Malaysian palm oil exports turn poor in October, so the stocks will likely grow to 2.65-2.80 mln tonnes at the end of this month. Therefore, palm oil futures on the BMD will still come under pressure in the near run. Palm oil stocks in China will also be increasing, as the demand is weak now and imports are huge both this month and next month. 

US soybean futures climbed to a three-month high of 934 cents after the USDA cut its yield and planted area estimates while raising crushings for 2019/20 soybeans. But the prices pared initial gains and closed at 920 cents with the drop in corn and wheat futures. 

Domestic oil futures moved higher yesterday on the pull of crude oil futures, and will further increase in terms of the fundamentals. And the spot prices are expected to fluctuate to adjust on the back of futures due to uncertainty in US-China trade negotiations. 

　　

Domestic oil market steadied earlier yesterday as the market was focusing on the ongoing trade negotiations, but then it was driven to rally by crude oil prices. An Iranian oil tanker was hit by an explosion in a possible terrorist act off the coast of Jeddah,?Saudi Arabia, which renewed concern for the situation in the Middle East. 

US soybeans were buoyed by the USDA report, in which the ending stocks came below 500 mln bushels due to lower yield estimates. Domestic oil market will somewhat be subdued, because China may increase exports of US agricultural products on account of higher RMB exchange rate and ongoing trade talks. But lower ending stocks of US soybeans will make US soybean futures strong, and thus providing support for oil futures on the Dalian Commodity Exchange. 

Lower production in the MPOB report did not shore up palm oil very much, so oils posted small adjustments after rebounds. The truth was that palm oil in Malaysia did increase a lot in September, and seeing from its current production and exports, the stocks might further increase.

Domestic rapeseed oil will continue its tight supply when there is almost no margin in imports from Europe and the imports are disrupted from Canada. Its price dipped on worries ahead of the holiday, and picked up rises after that. The price is predicted to post more upward potential, but participants need to focus on the influence from palm oil and soybean oil.