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Daily Review on Markets for Oilseeds and Oils in China--4/2/2020

2020-02-04 www.cofeed.com
Today (Feb. 4), the market for oilseeds and oils in China is shown as follows:
 
Oilseeds:

Cottonseed: Today, the cottonseed is not purchased and quoted, and only few cottonseed oil mills are operating so as to run down stocks. And the supply of cottonseed is limited on the market. However, oils fell sharply after the Lunar New Year affected by panic mood amid the new coronavirus pneumonia epidemic, so the demand for meals would be not improved soon. Therefore, cottonseed market is weighed down, and the price may drop further after trading resuming.

Oils: 

Summary: US soybean futures rebounded last night on concerns over a tight outlook in global vegetable oil supply and as US soybeans inspected for exports went higher to 1.3556 mln tonnes from 1.0596 mln tonnes in the previous week. Oil futures obviously slow down losses on the Dalian Commodity Exchange today, and the futures now post a weak short-term trend but a strong long-term outlook. Oil spot prices also follow to see smaller declines. Most mills have not resumed work in face of the epidemic situation. Soybean oil traders have quoted on the DCE basis, which is flat with that of yesterday. Palm oil traders who have quoted yesterday cut the price by 80 yuan/tonne today and those who have not offered cut the price by 330 yuan/tonne. Oil prices have dropped sharply with the fears of the novel coronavirus, but the virus has also forced a majority of mills to postpone the schedule for production. In this case, soybean crush is predicted to be only 710,000 tonnes this week, a 60% below the normal level; and then it will recover to 80% to 1.48 mln tonnes in that following week. The blockade for cities and roads is now a common outcome under the epidemic situation, so that the cost for transportation has been lifted by sluggish logistics. It was said that buyers had rushed to purchase edible oils under the spread of the virus outbreak, so the demand for packing oils are good in mills. Meanwhile, a huge rise in demand for instant noodles will also help increase palm oil usage. In addition, soybean oil stocks have already been at a low level before the holidays. Therefore, participants are suggested not to be too negative about the market, as it may gradually recover with easing panic after this round of declines. Buyers out of stock can wait for low and stable prices to make appropriate replenishment and remain cautious in chasing after high prices. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6350-6570 yuan/tonne in domestic coastal areas. (Tianjin traders Y2005+310, or 6350; Rizhao traders 6450, flat; Zhangjiagang traders Y2005+530, or 6570; and Guangzhou traders Y2005+500-550, or 6540-6590). 

Palm oil: RBD palm olein is mainly priced at 5950-6050 yuan/tonne in coastal areas, a decline of 80 yuan/tonne from yesterday and 330 yuan/tonne from that before the holidays. (Tianjin traders 6040-6050, down 80; Rizhao traders yet offered; Zhangjiagang traders 5970, down 330; Guangzhou traders 5950-5970, down 80; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil goes up in price, of which it settles up 30-50 yuan/tonne at 7690-7790 yuan/tonne. (Fujian 7690; Guangdong and Guangxi not offered) Rapeseed crush remains at a low level and fell by 29% from that before the holiday to 12,000 tonnes last week, as its supply is tightened by tensions between China and Canada. Rapeseed oil stocks are low with few sales available for nearby contracts, but the demand for packing rapeseed oil has increased as buyers are stocking up edible oils under the spread of the coronavirus. Therefore, rapeseed oil is predicted to keep its strengthening trend in the near term. But the catering industry has been hit heavily by the epidemic situation, and if that continues, the overall trend of rapeseed oil will likely be affected. Buyers now are suggested not to chase after excessively high prices. 

Cottonseed oil: Cottonseed oil is unquoted today, and most enterprises have yet to resume the operation. As most enterprises have not returned to work yet on account of the novel coronavirus pneumonia outbreak, the supply of cottonseed oil is very limited at the moment. But the downstream demand for cottonseed oil as blending oil is limited. Moreover, oils on DCE continue to drop today. Thereinto, spot palm oil offered yesterday down by 80 yuan/tonne, while unquoted yesterday down by 330 yuan/tonne. Thus, cottonseed oil market may be dragged down. With crush enterprises resuming the operation successively in the late period, cottonseed oil price is likely to go down.

(USD $1=CNY 6.98)