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Daily Review on Markets for Oilseeds and Oils in China--20/11/2019

Today (Nov. 20), 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 threatened that he would hike tariffs on Chinese commodities if two countries failed to reach a trade deal. 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 0.02 yuan/kg. The cottonseed production has 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 soar 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: US soybean futures were slightly higher last night. Oil futures rise broadly on the Dalian Commodity Exchange pushed by the arbitrage of buying oils and selling meals after a Reuters report said that Malaysia would begin implementing B20 mandate in stages from early next year. In the spot markets, soybean oil follows to increase by 80-110 yuan/tonne and palm oil by 140-160 yuan/tonne. Buyers are cautious now so the trading remains tepid except some deals upon forward basis. After several consecutive declines, oil futures surge on the DCE again today. Apart from some external factors, the fundamentals are also bullish. Soybean stocks posted a year-on-year decline of 51% and blocked in tight supplies, so mills have no choice but to keep low operation rates, and soybean oil stocks thus fall 4% to 1.135 mln tonnes. But gross crush margins for Brazilian soybeans on the DCE hit 242-272 yuan/tonne, and a Chinese state-owned firm bought 2 cargoes of soybeans from Argentina and 2 cargoes from Brazil on Tuesday, which may affect the upward space at present. The overall market is predicted to maintain the strengthening trend during the restocking for the Spring festival, but also to suffer some risk of frequent fluctuations. It is important to keep balance between purchase and sale, and buyers with adequate stocks are suggested to make replenishment on the dips and not to drive up prices higher excessively.

Soybean oil: GB Grade I soybean oil is mainly priced at 6,580-6,800 yuan/tonne in domestic coastal areas, an increase of 80-110 yuan/tonne. (Tianjin traders 6,580-6,590, Rizhao traders 6,700, Zhangjiagang traders 6,680, and Guangzhou mills 6,800 and traders 6,590). 

Palm oil: RBD palm olein is mainly priced at 5,590-5,770 yuan/tonne in coastal areas, up 140-160 yuan/tonne. (Tianjin traders 5,710-5,720, up 160; Rizhao traders 5,760-5,770, up 160; Zhangjiagang traders 5,700, up 160; Guangzhou traders 5,590-5,600, up140; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil goes up in price today, of which it settles up 50-70 yuan at 7,670-7,800 yuan/tonne in coastal areas. (Fujian 7,670, up 70; Guangdong yet offered; and Guangxi 7,800). China’s rapeseed supply is still tightened by its rocky relations with Canada. The operation rate for rapeseed crush is declining as some mills have no imports now. Moreover, the peak demand before the New Year’s Day and the Spring Festival is coming, and mills now are mainly carrying out contracts. Rapeseed oil is predicted to go short in main consumption regions. The market continues to be bullish about oil prices, so rapeseed oil prices will probably keep the strengthening trend and also will suffer some risks of frequent fluctuations at the high level. Buyers are suggested to keep balance between purchase and sale. 

Cottonseed oil: Cottonseed oil price stays stable with some rises of 50-200 yuan/tonne today. The stock of cottonseed oil is low, and price of cottonseed is high. Besides, Reuters reported that Malaysia would implement the B20 programme in advance from early 2020. Moreover, the arbitrage of buying oils and selling meals pushes oils on DCE today to rise widely. Spot soybean oil up 80-110 yuan/tonne, and spot palm oil up 140-160 yuan/tonne. Therefore, cottonseed oil market is boosted by these factors. But some factories mainly wait and see due to the light trading of new orders. In addition, the peak season for stocking up packing oil has begun, so the overall market outlook is still bullish relatively. Buyers can make proper replenishment on the dips and remain cautious in chasing up prices.

(USD $1=CNY7)