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Daily Review on Markets for Oilseeds and Oils in China--26/11/2019

Today (Nov. 26), 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. It is reported that China and the US have been very close to a phase 1 trade deal, except that they still have not reached a consensus on specific details or scales of tariff reduction on Chinese imports. The certain prospect for a trade deal is also bullish to domestic distribution markets. The market for imported soybeans will probably keep firm in the short term. 

Cottonseed: Cottonseed prices stay stable with some declines of 0.01-0.04 yuan/kg. Oil mills are wary of purchasing cottonseed due to little shipping quantity of cottonseed oil and cottonseed meal and a big drop in bulk oils prices. Thus, 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 limits the declines of prices. It is expected that short-term cottonseed will fluctuate but maintain the overall upward trend. Buyers could maintain wait-and-see attitudes.


Summary: US soybean futures continued to close lower last night on an uncertain trade prospect between China and the US and favorable weather in South America. Oil futures stop rising to fall broadly on the Dalian Commodity Exchange today as funds are exiting the market after booking profits, of which palm oil hits the decline limit in the afternoon. In the spot markets, soybean oil is down 80-100 yuan/tonne and palm oil down 160-240 yuan/tonne, both in lukewarm trading. The effect of production reduction in palm oil has gone exhausted, in addition to lower exports, which were down 3% in November 1-25 from the same period last month in Malaysia. And also last week, palm oil stocks rose 4% to 680,000 tonnes in China; Chinese mills bought a total over 40 boatloads of soybeans; and they also picked up soybean crush by 8.3% to 1.77 mln tonnes and will probably raise it to above 1.80 mln tonnes in the coming two weeks. In addition, chief trade negotiators from China ad the US have held a phone talk today, which is bearish to domestic market. All the above factors have sent the oil market to fall sharply. But mills still have many contracts to fulfill, so soybean oil stocks will drop further. Palm oil is also in the period of production reduction. Therefore, domestic oil market is predicted to keep its strong trend unchanged. This round of price declines is just the correction on previous huge rises. As oil futures are in correction territory now, buyers can wait for low and stable prices to make appropriate replenishment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,390-6,680 yuan/tonne in domestic coastal areas, a decline of 80-100 yuan/tonne. (Tianjin traders 6460-6470 in the morning, Rizhao traders 6,570, Zhangjiagang traders 6,560 in the morning, and Guangzhou mills 6,680 and traders 6,390-6,400). 

Palm oil: RBD palm olein is mainly priced at 5,470-5,650 yuan/tonne in coastal areas, a decline of 160-240 yuan/tonne. (Tianjin mills 5,650, down 160, and traders 5,710-5,720 in the morning; Rizhao traders yet offered; Zhangjiagang traders 5,670 in the morning; Guangzhou traders 5,470, down 240). 

Imported rapeseed oil: Imported rapeseed oil goes down in price today, of which it settles down 30-50 yuan at 7,570-7,700 yuan/tonne in coastal areas. (Fujian 7,570; Guangdong yet offered; and Guangxi 7,700.) Crush margins for imported soybeans remain quite good so that Chinese mills were attracted to buy a total over 40 boatloads of soybeans last week. Meanwhile, they also picked up soybean crush to 1.77 mln tonnes last week and will likely raise it to over 1.80 mln tonnes in the coming two weeks. These will curb the trend of rapeseed oil. But mills now have very few rapeseed stocks due to tensions between China and Canada, and rapeseed and rapeseed oil stocks have fallen for a 6th week. In addition, with the coming of the peak demand for packing oils, mills are trying to prop up prices, so the decline of rapeseed oil prices is smaller than that of soybean oil and palm oil. Short-term rapeseed oil prices will probably fluctuate at the high level, and buyers can wait at the moment as rapeseed oil is now dragged down by a sharp loss in palm oil, which was used to be the best performer. 

Cottonseed oil: Cottonseed oil price stays stable with some declines of 50-200 yuan/tonne today. The actual transactions of some factories are still not much. Besides, the bearish news that China’s chief trade negotiator held a phone call with U.S. counterpart today, resulted in stagnancy and a wide range of falls of oils on DCE. And palm oil on DCE reached the decline limit in afternoon trade. Spot soybean oil down by 80-100 yuan/tonne, and spot palm oil down by 160-240 yuan/tonne. Therefore, cottonseed oil market is weighed down by these factors. However, the declines of prices are also curbed by low stock of cottonseed oil in some factories and pricey cottonseed. It is predicted that short-term cottonseed oil market may fluctuate to adjust. In addition, the peak season for stocking up packing oil has begun, so the overall market outlook is still bullish relatively. Buyers can maintain a wait-and-see attitude.

(USD $1=CNY7.03)