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China Soybean Weekly Report -- As of January 3, 2020

2020-01-07 www.cofeed.com
I.Soybean

Price: Market participants are expecting China will boost purchases of US soybeans as the two countries will soon sign the phase 1 trade deal. Moreover, the commissioner from the USDA estimates Brazil’s soybean production at 123.5 mln tonnes in 2019/20, which will make the country surpass the US to be the largest soybean producer in the world. But imported soybean supply to distribution markets remains scanty at ports, and traders are in fair shipments. In a hybrid of the bull and the bear, the market for imported soybeans will probably keep steady in the short term. 





Crush: The operation rates for soybean crush continue the upward trend this week (Dec. 28-Jan. 3), in spite of the downtime for swollen stocks in some Guangdong mills. The crush at domestic mills totals 2,000,500 tonnes (meal 1,580,395 tonnes and oil 380,095 tonnes), up 1700 tonnes or 0.08% from 1,998,800 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) reach 56.78%, up 0.05 percentage points from 56.73% in the previous week. Soybean crush is predicted to go further higher to around 2.03 mln tonnes next week and then fall down to around 1.92 mln tonnes that following week amid downtime in some mills. 

Soybean crush nationwide is estimated at 808 mln tonnes in December at current utilization rate, above the 7.12 mln tonnes in the previous month and also above 7.60 mln tonnes of the corresponding period last year.  

As of this week, soybean crush nationwide totals 22,891,000 tonnes in the crushing year of 2019/20 (from October 1st, 2019), down 11,158,285 tonnes or 4.81% from 24,049,285 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 857,357 tonnes, down 40,528 tonnes or 4.51% from 897,885 tonnes of the corresponding period in 2018. 



Inventory: Imported soybean stocks decline this week as the crush returns to a high level of 2 mln tonnes, but the decline is limited by huge imports arriving at ports. In the week as of January 3rd, imported soybean stocks in mills in domestic coastal regions total 4,050,400 tonnes in main domestic coastal oil mills, down 18,800 tonnes by 0.46% from 4,069,200 tonnes last week and down by 31.43% from 5,907,000 tonnes of the same period last year. As soybean crush is expected to stay a high level of over 2 mln tonnes next week, the stocks will likely follow to fall slightly.



Import and its outlook: According to Cofeed, imported soybean is 25 cargoes with 1.607 mln tonnes this week, a total of 12 cargoes with 763,000 tonnes for January so far. The import is predicted to be 113 cargoes with 7.402 mln tonnes for January, 5 mln tonnes for February, and 5.10 mln tonnes for March. Statistics will be updated every week on account of variable and unstable buying.  

II.Soybean Meal

Price: This week (Dec. 30-Jan. 3), domestic soybean meal prices rebound. As of this Friday, the price settles up 10-50 yuan/tonne at 2,690-2,860 yuan/tonne in domestic coastal regions. 





Inventory: Soybean meal stocks continue to increase this week as soybean crush continues to stay at a very high level. In the week as of January 3rd, the inventory in mills in domestic coastal regions totals 589,400 tonnes, up 69,100 tonnes by 13.28% from 520,300 tonnes last week yet down by 52.13% from 1,231,300 tonnes of the corresponding period last year. Soybean meal stocks will probably continue to mount higher next week.



III.Soybean Oil

Price: This week (Dec. 30-Jan. 3), domestic soybean oil prices move higher for a fifth straight week. As of this Friday, the price for GB Grade I settles at 7,020-7,250 yuan/tonne in domestic coastal regions, mostly up by 30-180 yuan/tonne. 





Inventory: Soybean oil sees higher stocks this week as its output increases with rising operation rates. In the week as of Jan. 3rd, China’s commercial inventory has totaled 924,500 tonnes, up 7,770 tonnes by 0.85% from 916,730 tonnes last week, down 127,500 tonnes by 12.12% from 1,052,000 tonnes last month, and down 662,500 tonnes by 41.75% from 1,587,000 tonnes of the corresponding period last year. And the five-year average at the same period is 1,189,800 tonnes.