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Daily Review on Markets for Oilseeds and Oils in China--25/11/2019

Today (Nov. 25), 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. The market is worried that a phase one deal between China and the United States could slide into next year, so the certain prospect for a trade deal is also bullish to domestic distribution markets. Short-term market for imported soybeans will probably keep firm in the short term.

Cottonseed: Cottonseed prices fluctuate in a range of 0.02-0.04 yuan/kg today. Oil mills are wary of purchasing cottonseed due to little shipping quantity of some cottonseed oil and cottonseed meal, so cottonseed market is dragged down. And some plants cut the price. However, the cottonseed production is lower than last year, and the spot supplies are tight, which leads price in some regions to rise. It is expected that short-term cottonseed will fluctuate but maintain the overall upward trend. Buyers with stocks in hand could maintain wait-and-see attitudes.


Summary: US soybean closed lower last Friday night on favorable weather in South America and an uncertain prospect for a trade deal between China and the US. But after a surge on BMD last Friday afternoon due to the drop in production, palm oil futures follow to post strong gains on the Dalian Commodity Exchange today and soybean oil just moves higher moderately. In the spot markets, soybean oil increases by 10-40 yuan/tonne and palm oil by 110-140 yuan/tonne. Due to small growth of soybean oil on the DCE, buyers are cautious in chasing after high prices and in clinching deals. Gross crush margins for Brazilian soybeans stay high at 226-293 yuan/tonne, which is attracting domestic mills to make soybean imports. Chinese mills bought a total of 35 cargoes from South America and 2 cargoes from US Gulf last week. Soybean crush rallied to 1.77 mln tonnes last week and will likely increase further to above 1.80 mln tonnes in the coming two weeks, which is bearish to soybean oil market in China. But palm oil is extending its strong trend, and soybean oil stocks have been declining, with a reduction by 4.33% to 1.09 mln tonnes last week, so mills are propping up prices. The overall oil market is predicted to keep its strengthening trend, but the market has limited demand now due to the surge in price, so it is necessary to avoid risks of declines and adjustment in prices after this wave of rises. Buyers are suggested not to drive up prices higher, but to wait for low and stable prices to make appropriate replenishment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,560-6,680 yuan/tonne in domestic coastal areas, an increase of 10-40 yuan/tonne. (Tianjin traders 6,560-6,570, Rizhao traders 6,680, Zhangjiagang traders 6,650, and Guangzhou mills 6,750 and traders 6,580). 

Palm oil: RBD palm olein is mainly priced at 5,700-5,860 yuan/tonne in coastal areas, mostly up by 110-140 yuan/tonne. (Tianjin traders 5,790-5,800, up 110; Rizhao traders 5,850-5,860, up 140; Zhangjiagang traders 5,770, up 110; Guangzhou traders 5,700-5,720, up 140; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil goes basically stable in price today, of which it settles at 7,650-7,750 yuan/tonne in coastal areas. (Fujian 7,670; Guangdong yet offered; and Guangxi 7,750.) There is no sign of a thaw in relations between China and Canada, so mills are facing rapeseed shortages. Meanwhile, the market has been in the peak demand for packing oils in the run up for the Spring Festival. Rapeseed and rapeseed oil stocks have been falling for a 6th week, with the latter down 5% to 380,000 tonnes last week. Rapeseed oil market has a positive outlook. But good crush margins for soybeans on the DCE is attracting Chinese mills to keep on booking imports, and the demand for oils has been slower after replenishing in huge quantity previously. Short-term rapeseed oil prices will likely follow futures to fluctuate frequently at the high level, and buyers can wait at the moment. 

Cottonseed oil: Cottonseed oil price stays stable with fluctuations of 50-100 yuan/tonne today. Factories have low stocks of cottonseed oil, and cottonseed is pricey. Besides, palm oil on DCE today rises strongly and soybean oil moves higher moderately. Spot soybean oil up by 10-40 yuan/tonne, and spot palm oil up by 110-140 yuan/tonne. Therefore, cottonseed oil market is under support. Nevertheless, the pace of rise in prices is affected by little actual transactions in some factories. In addition, the peak season for stocking up packing oil has begun, so the overall market outlook is still bullish relatively. Buyers with stocks in hand can stay on the sideline and make proper replenishment upon lower prices.

(USD $1=CNY7.04)