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Daily Review on Markets for Oilseeds and Oils in China--18/11/2019

Today (Nov. 18), the market for oilseeds and oils in China is shown as follows:

Imported soybean: Imported soybeans steady today, among which Kazakhstan soybean  is unchanged at 4,180 yuan/tonne, and Ukraine soybean at 3,500 yuan/tonne. Imported soybean supply to distribution markets remains scanty at ports, and traders are in fair shipments. This is still favorable to domestic market. But White House economic adviser said that the United States and China are getting close to a trade agreement, and chief negotiators from both sides had constructive talks to discuss each other’s core issues for the first phase in a phone call Saturday. The detente in relations between China and the United States is bearish to domestic soybean market. Short-term market for imported soybeans will probably keep firm in the short term. 

Cottonseed: Cottonseed prices stay stable with some rises of 0.01-0.02 yuan/kg. The cottonseed products have decreased than last year, and spot goods are tight due to the contract implementation. Thus, the cottonseed market is supported. But the rises of cottonseed price may ease due to slow delivery of cottonseed oil and cottonseed meal. Therefore, it is predicted that the overall cottonseed will still keep an upward trend with fluctuations. Additionally, with a sign of rebound of bulk oils and meals today, buyers can make proper replenishment on the dips.


Summary: White House said that the United States and China are getting close to a trade agreement, and chief negotiators from both sides had constructive talks to discuss each other’s core issues for the first phase in a phone call Saturday. US soybean rose last Friday. But soybean oil futures move sideways to adjust and palm oil edges higher on the Dalian Commodity Exchange today. In the spot markets, soybean oil posts a partial decline of 20-50 yuan/tonne and palm oil fluctuates by 10-40 yuan/tonne. The trading is tepid for spot contracts and better upon forward basis. Gross crush margins for Brazilian soybeans on the DCE still stay at around 220 yuan/tonne, so Chinese importers bought at least 16 cargoes of soybeans from Brazil last week. There is a sign of stronger upward potential for meal futures on the DCE, so oil futures are curbed by short covering in meal futures. But some mills now keep low operation rates due to tight soybean supplies, and soybean oil stocks fell further by 4.2% to 1.135 mln tonnes as of November 15th, and the outstanding contracts increase by 105 to 1.51 mln tonnes. The overall market is expected to trend upward again after this round of adjustment and will maintain its strengthening trend. Buyers can wait for low and stable prices to make appropriate replenishment.

Soybean oil: GB Grade I soybean oil is mainly priced at 6,450-6,580 yuan/tonne in domestic coastal areas, a decline of 20-50yuan/tonne. (Tianjin traders 6,450-6,460, Rizhao traders 6,580, Zhangjiagang traders 6,570, and Guangzhou mills 6,650 and traders 6490-6,500). 

Palm oil: RBD palm olein is mainly priced at 5,390-5,540 yuan/tonne in coastal areas, fluctuating by 10-40 yuan/tonne. (Tianjin traders5,530-5,540, up 10; Rizhao traders yet offered; Zhangjiagang traders 5,500, up 40; Guangzhou traders 5,390, up 20; and Xiamen yet offered).

Imported rapeseed oil: Imported rapeseed oil is basically stable in price today, of which it settles at 7,560-7,750 yuan/tonne in coastal areas. (Fujian 7,560; Guangdong yet offered; and Guangxi 7,750). There is no sign of a thaw in relations between China and Canada, so Chinese mills now are generally lack of rapeseed for crush. Meanwhile, the market will welcome the peak demand in packing oils in the run up for the Spring Festival. Stocks of rapeseed and rapeseed oil have declined for a fifth week, with the latter down 5% to only 400,000 tonnes left last week. The overall rapeseed oil market is positive, but short-term prices may follow futures to fluctuate frequently. Buyers can buy on immediate demand at the moment. 

Cottonseed oil: Cottonseed oil prices stay stable with a declining of 50-100 yuan/tonne. Some factories clinch little deal of new orders. Besides, White House said China and U.S. were getting close to the “Phase One” deal. U.S.-China trade negotiators had constructive talks about each other’s core issues for the first phase of an initial trade agreement in a phone call on last Friday, which is bearish for oils market. However, oil mills have a strong will to prop up prices due to low inventory of cottonseed oil and high price of cottonseed. In addition, the peak season for stocking up packing oil has begun, and the falling space of cottonseed oil price is limited. Therefore, the overall market outlook is still bullish relatively, and buyers can make proper replenishment upon low and stable prices.

(USD $1=CNY7)