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Daily Review on Markets for Oilseeds and Oils in China--21/11/2019

Today (Nov. 21), 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. A report said that the phase one deal between China and the United States might be delayed till next year. And 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 0.01-0.02 yuan/kg. The cottonseed production has decreased than last year, and the purchase schedule is obviously faster than the previous year. Meanwhile, spot goods are tight due to the contract implementation. But the rises of cottonseed price may ease due to slow delivery of cottonseed oil and cottonseed meal. But the continuous increase 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: Reuters reported that a phase one trade deal between China and the United States could slide into 2020. And Donald Trump threatened that he would impose additional tariffs on Chinese commodities if two countries failed to reach the phase one deal before December 15. US soybean futures closed with losses on renewed concerns over US-China trade relations. And participants are worried that the substantive good of Malaysia B 20 is too weak to underpin the market for another huge rise, so palm oil and soybean oil both slow down gains on the Dalian Commodity Exchange on profit taking. Spot oils are mostly steady with some further increases of 10-20 yuan/tonne, and the trading for spot month is tepid except some deals upon forward basis. Gross crush margins for Brazilian soybeans on the DCE reach 210-270 yuan/tonne, so mills continue to import soybeans and go hedging on the DCE, which has slowed down the upward pace of oil futures. But mills have to keep low operation rates due to tightening soybean stocks, so soybean oil stocks follow to decline. Participants are bullish about later market. The market is predicted to keep its strengthening trend over the peak demand for packing oils in the run up to the Spring Festival, but will also suffer risk of frequent fluctuations. Buyers with stocks are suggested not to drive up prices too high, but to make appropriate replenishment on the dips. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,580-6,800 yuan/tonne in domestic coastal areas, a partial increase of 10-20 yuan/tonne. (Tianjin traders 6,580-6,590, Rizhao traders 6,700, Zhangjiagang traders 6,690, and Guangzhou mills 6,800 and traders 6,620). 

Palm oil: RBD palm olein is mainly priced at 5,620-5,790 yuan/tonne in coastal areas, up 10-20 yuan/tonne partially. (Tianjin traders 5,720-5,730, up 10; Rizhao traders 5,780-5,790, up 20; Zhangjiagang traders 5,720, up 20; Guangzhou traders 5,620-5,630, flat; and Xiamen 5,780, flat). 

Imported rapeseed oil: Imported rapeseed oil goes down in price today, of which it settles down 20-30 yuan at 7,670-7,750 yuan/tonne in coastal areas. (Fujian 7,670; Guangdong yet offered; and Guangxi 7,750.) Good crush margins for soybeans on the DCE is attracting Chinese mills to keep on booking imports, which is curbing rapeseed oil market. But rapeseed crush mills now have low stocks due to tensions between China and Canada, and rapeseed oil stocks follow to continue the decline in this case. Moreover, the peak demand for packing oils is coming, and mills have a strong intention to prop up prices. Rapeseed oil market has a positive outlook and may fluctuate to adjust at the high level in the short term. Buyers can stay on the sidelines at the moment. 

Cottonseed oil: Cottonseed oil price stays stable with some rises of 50-100 yuan/tonne today. The cottonseed oil market is supported by low stock of cottonseed oil in factories and high price of cottonseed. Moreover, spot soybean oil partially rises further by 10-20 yuan/tonne. But the price is temporarily stable due to dull actual transactions in some factories. Besides, completion a “phase one” U.S.-China trade deal could slide into next year, according to Reuters. And U.S. president Donald Trump has threatened to raise the tariffs even higher if the two sides do not make the first phase of deal before Dec. 15, raising worries about the trade relations between China and U.S. 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=CNY7.02)