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Daily Review on Markets for Oilseeds and Oils in China--22/11/2019

Today (Nov. 22), 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, which help underpin domestic market now. Reuters reported that the phase one deal between China and the United States might be delayed till next year, but China’s Ministry of Commerce said that economic and trade teams from both sides will continue to keep close negotiations. The confusing signal from trade negotiations is also bullish to domestic distribution markets. Short-term market for imported soybeans will probably keep firm in the short term. 

Cottonseed: Cottonseed prices stay stable with some strong fluctuations of 0.01-0.04 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 market will still maintain an upward trend with fluctuations overall. Buyers can stay on the sideline and make proper replenishment upon lower prices.


Summary: US soybeans continued to close lower last night on an uncertain prospect in a trade deal between China and the United States, and as soybean crop planting were two thirds completed under favorable weather in Brazil. Oil futures extend the downtrend on yesterday afternoon on the Dalian Commodity Exchange today due to the influence of profit taking. In the spot markets, soybean oil and palm oil step down 10-70 yuan/tonne in tepid trading. Gross crush margins for Brazilian soybeans stay high at 211-268 yuan/tonne, and China bought 3 to 4 boatloads of Brazilian soybeans for shipment after February and 1 boatload Argentine soybeans for April and May shipment. This has also capped the upward pace of the oil market. But mills have to keep low operation rates due to tightening soybean stocks which have fell 51% from a year earlier, and they have also sold huge quantity of soybean oil on forward basis recently, so soybean oil stocks are declining. Insiders expected a very little growth in palm oil production in the two top producers - Malaysia and Indonesia. But with increasing demand from biodiesel, the market may see supply shortages, which will be a bullish factor. Participants are still bullish about the outlook, so there is little space for this round of declines. The market is predicted to keep its strengthening trend during the peak demand for packing oils in the run up to the Spring Festival, and buyers can wait for low and stable prices to make appropriate replenishment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,530-6,750 yuan/tonne in domestic coastal areas, mostly down by 30-70 yuan/tonne. (Tianjin traders 6,530-6,540, Rizhao traders 6,640, Zhangjiagang traders 6,640, and Guangzhou mills 6,750 and traders 6,560). 

Palm oil: RBD palm olein is mainly priced at 5,560-5,720 yuan/tonne in coastal areas, mostly down by 10-70 yuan/tonne. (Tianjin traders 5,670-5,680, down 10; Rizhao traders 5,710-5,720, down 70; Zhangjiagang traders 5,660, down 60; Guangzhou traders 5,560; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil goes down in price today, of which it settles down 10-20 yuan at 7,650-7,750 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, and the liquidation after profit taking in surging oil futures has also curbed the trend of rapeseed oil. But there is no sign of a thaw in relations between China and Canada, so mills are facing rapeseed shortages. And both rapeseed oil and soybean oil stocks go declining. Meanwhile, despite the coming of the peak demand for packing oils in the run up for the Spring Festival, most mills are still carrying out contracts as they are stalling sales and propping up prices. The market is bullish about a better oil market, so rapeseed oil market is predicted to keep its strengthening trend and will also go through some fluctuations and adjustments at the high level. Buyers can wait at the moment. 

Cottonseed oil: Cottonseed oil price is stable with several rises of 100 yuan/tonne today. Individual factories raise offer due to low stock of cottonseed oil and high price of cottonseed. But the actual transactions of some factories are dull, and oils on DCE today decline. Spot soybean oil and palm oil decline by 10-70 yuan/tonne. Therefore, cottonseed oil market is dragged down by these factors, and short-term cottonseed oil price is expected to follow bulk oils to move sideways with fluctuations. Nevertheless, the peak season for stocking up packing oil has begun, so the overall market outlook is still bullish relatively. Buyers can stay on the sideline and make proper replenishment upon lower prices.

(USD $1=CNY7.03)