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Daily Review on Markets for Oilseeds and Oils in China--2/12/2019

Today (Dec. 2), the market for oilseeds and oils in China is shown as follows:
 
Oilseeds:

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. China criticized the US side over signing the so-called Hong Kong Human Rights and Democracy Act into law, and warned that it will take tough counter-measures if the US continues to interfere Hong Kong affairs. US soybean imports later may get impeded by the uncertain trade relationship between China and the United States, which is bullish to domestic distribution markets. Overall, the market for imported soybeans will probably keep firm in the short term. 

Cottonseed: Cottonseed prices stay stable with a rise of 0.01-0.03 yuan/kg. The cottonseed production is lower than the previous year, so there are not many spot goods available for sale and the supply is tight. But ranches continue to purchase cottonseed. Thus, cottonseed market is boosted. However, oil mills purchase cottonseed prudently due to little shipping quantity of cottonseed oil and cottonseed meal, some mills even halt the purchase. In consequence, the rises of cottonseed prices are limited. It is expected that short-term cottonseed may go up with fluctuations. Buyers can make small replenishment on the dips and remain cautious in chasing up prices.

Oils: 

Summary: China criticized the US side on signing the Hong Kong-related bill into law and warned that it would take strong countermeasures, and the two countries had been at odds on whether to cancel additional tariffs in phase one trade deal. US soybean futures closed lower last Friday on concerns over trade disputes. Chinese buyers are scooping up on South American soybeans, with a total of nearly 20 cargoes of Brazilian soybeans last week, and soybean crush thus increased further by 0.3% to 1.78 mln tonnes. Soybean oil and palm oil fluctuate to move down on the Dalian Commodity Exchange today. In the spot markets, soybean oil steadily declines by 30-60 yuan/tonne, and palm oil mostly down by 10-60 yuan/tonne, both in tepid trading. Soybean oil stocks declined further by 2.3% to 1.06 mln tonnes as of November 29th as mills had signed many contracts on forward basis. Domestic supply of soybean oil and rapeseed oil is decreasing. In addition, funds are betting on going long due to lower palm oil production and higher demand from biodiesel, so the oil market by and large still has a positive outlook. But due to good crush margins, soybean arrivals at domestic ports are expected to reach 9.35 mln tonnes in December. Palm oil in Malaysia posts very sharp price rises under the push of speculators, narrowing its price spread with FOB prices of South American soybean oil to USD 35/tonne, far below a normal level of 100-150 yuan/tonne. As a result, Indian importers shift to South American markets, and palm oil futures fall significantly in Malaysia today. Short-term market may suffer risks from fluctuations and adjustments, and buyers can wait at the moment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,440-6,580 yuan/tonne in domestic coastal areas, a partial decline of 30-60 yuan/tonne. (Tianjin traders 6,440-6,450, Rizhao traders 6,560, Zhangjiagang traders 6,520, and Guangzhou mills yet offered and traders 6,430-6,440). 

Palm oil: RBD palm olein is mainly priced at 5,600-5,710 yuan/tonne in coastal areas, mostly down 10-60 yuan/tonne.(Tianjin traders5,690-5,700, down 10; Rizhao traders 5,710, down 40;Zhangjiagang traders 5,640, down 60;Guangzhou traders 5,600, down 30; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil steadily fluctuate in price today, of which it fluctuates 20-30 yuan to settle at 7,680-7,880 yuan/tonne in coastal areas. (Fujian 7,680; Guangdong yet offered; and Guangxi 7,880, down 20.) Chinese importers keep buying up on soybeans due to good crush margins for Brazilian crops on the DCE. And the slowdown in demand for oils after a wave of replenishment also curbs the trend of rapeseed oil. But as there is no sign of a thaw in relations between China and Canada, domestic mills now are facing rapeseed shortages, and rapeseed oil stocks have been falling for a 7th week last week to 350,000 tonnes, a decline of 6%. Mills are propping up prices, which helps limit declines. Short-term prices will largely mainly at high levels, and buyers can stay on the sidelines at the moment. 

Cottonseed oil: Cottonseed oil price stays stable with some fluctuations of 50 yuan/tonne today. The offer is high but transaction price is lower, so the actual contract is dull. Besides, soybean oil and palm oil on Dalian Commodity Exchange today move down with fluctuations. Spot soybean oil steadily declines by 30-60 yuan/tonne and spot palm oil mostly drops by 10-60 yuan/tonne, which weighs down cottonseed oil market. However, some factories have low stocks of cottonseed oil, and cottonseed is pricey. Thus, oil mills intend to prop up price even more. And short-term cottonseed oil is expected to be resilient or relatively flat. But bulk oils are fluctuating to adjust, so buyers can wait and see.

(USD $1=CNY7.03)