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Daily Review on Markets for Oilseeds and Oils in China--19/11/2019

Today (Nov. 19), 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. President Donald Trump said that he may not roll back some previously-imposed additional tariffs for reaching the phase one deal, which remains as a source of uncertainty in the trade deal between China and the United States. All these are favorable to domestic market. Short-term market for imported soybeans will probably keep firm in the short term. 

Cottonseed: Cottonseed prices stay stable with some rises of 0.01-0.04 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. But the rebound in bulk oils prices today may boost cottonseed oil market. Therefore, it is predicted that the overall cottonseed will still keep an upward trend with fluctuations. Buyers can make proper replenishment on the dips and remain cautious in chasing up prices.


Summary: Crop-boosting rain was expected to fall in both Brazil and Argentina. And after President Donald Trump said that he may not roll back some previously-imposed additional tariffs for reaching phase one deal, a foreign media reported that China was pessimistic about a trade deal with the United States. Therefore, US soybean futures closed lower last night. But oil futures rally on the Dalian Commodity Exchange due to the arbitrage of buying oils and selling meals. In the spot markets, soybean oil and palm oil rise by 20-50 yuan/tonne in tepid trading. Soybean stocks fell by 51% from a year earlier and see tight supplies. Mills are thus keep relatively low operation rates, and soybean oil stocks decline further by 4% to 1.135 million tonnes as of November 15th. Mills now are propping up prices. But gross crush margins for Brazilian soybeans on the DCE still stay at 237-265 yuan/tonne, which has weakened the upward potential in oil market. The oil market may follow futures to fluctuate frequently in the near term, but will probably maintain the strengthening trend when buyers are restocking for the Spring Festival. Buyers are suggested to replenish on the dips in small batch and remain cautious in chasing after high prices. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,500-6,600 yuan/tonne in domestic coastal areas, a decline of 20-50 yuan/tonne. (Tianjin traders 6,500-6,510, Rizhao traders 6,620, Zhangjiagang traders 6,600, and Guangzhou mills yet offered and traders 6500-6510). 

Palm oil: RBD palm olein is mainly priced at 5,440-5,600 yuan/tonne in coastal areas, up 30-50 yuan/tonne. (Tianjin traders 5,560-5,570, up 30; Rizhao traders 5,600, up 50; Zhangjiagang traders 5,540, up 50; Guangzhou traders 5,440, up 50; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil goes up in price today, of which it settles up 30-50 yuan at 7,590-7,750 yuan/tonne in coastal areas. (Fujian 7,590, up 30; Guangdong yet offered; and Guangxi 7,750). Rapeseed supply is tightening as it is difficult for China and Canada to address their issues in a short time. Most mills either halt production or crush soybean instead now. Stocks of rapeseed and rapeseed oil in domestic coastal regions have fallen for a fifth consecutive week, while buyers are stocking up for the New Year’s Day and also for the Spring Festival which will come earlier in Chinese lunar calendar this year. Mills now are fulfilling contracts. Rapeseed oil stocks will continue to decline in this case. Moreover, several million acres of canola in Canada are buried by heavy snow now, which can delay farmers from planting the next crop and reduce the supply. Rapeseed oil market is positive overall, but may follow future to fluctuate frequently. Buyers can buy for immediate demand at the moment. 

Cottonseed oil: Cottonseed oil price stays stable with several declines of 50 yuan/tonne today. Some factories reduce the price due to light trading of new orders. But oil mills have a strong will to raise price due to low stock of cottonseed oil and high price of cottonseed. Moreover, oils on DCE today stop declining and start rebounding due to an arbitrage of buying oils and selling meals, and spot soybean oil and palm oil rises by 20-50 yuan/tonne. 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. As for the trade war, U.S. Pres. Donald Trump said that he may not roll back tariffs imposed previously in the first phase of deal. And foreign media reported that China was pessimistic in reaching a trade agreement.

(USD $1=CNY7)