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Daily Review on Markets for Oilseeds and Oils in China--14/2/2020

2020-02-14 www.cofeed.com
Today (Feb. 14), the market for oilseeds and oils in China is shown as follows:
 
Oilseeds:

Cottonseed: The cottonseed is not offered today. And a minority of oil mills will resume operation recently. But Xinjiang cottonseed can’t be transported to inland due to logistics constraints and inland ginneries have not returned to work yet, so oil mills have a difficulty in purchasing cottonseed and mainly use their stocks. Also, the supply of cottonseed is limited on the market, which supports cottonseed market. However, the demand from catering industry has been hard hit by fears amid the novel coronavirus pneumonia epidemic, which leads cottonseed oil to at risk in dropping. And the outlook of demand for meals is worrisome. Therefore, the price may drop moderately after trading resuming.

Oils: 

Summary: US soybean futures continued to rise last night. Oil futures extend losses on the Dalian Commodity Exchange today, as traders conclude the arbitrage of buying soybean oil and selling soybean meal. In the spot markets, soybean oil declines by 30-100 yuan/tonne and palm oil down 50 yuan/tonne, both in tepid trading. Palm oil exports are dismal in Malaysia, and India has seen its January ending-stocks go higher-than-expected to 1.735 mln tonnes. In addition, Brazil real has dropped to a fresh historic low, which reduces soybean export cost, so China is actively buying up its soybeans. In the meantime, oil mills are also picking up operation rates for soybean crush. Nevertheless, the demand for oils has been poor, as the catering industry has been hit hard by the novel coronavirus, which is not still under comprehensive control. The trading in soybean oil market has thus been very weak with an average of only 1,973 tonnes per day since February, well below a normal level of 20,000 tonnes. In this case, soybean oil stocks will again go higher above 900,000 tonnes, and it is said that several mills have already been with swelling stocks. Overall, the oil market is predicted to fluctuate with a weak trend ahead of a thorough control over the epidemic, and buyers can wait for low and stable prices to make appropriate replenishment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6130-6400 yuan/tonne in domestic coastal areas, a decline of 30-100 yuan/tonne. (Tianjin traders 6130-6150; Rizhao traders 6300; Zhangjiagang traders 6400; and Guangzhou traders 6280-6300). 

Palm oil: RBD palm olein is mainly priced at 5780-5880 yuan/tonne in coastal areas, down by 50 yuan/tonne. (Tianjin traders 5820-5830, down 50; Rizhao traders 5870-5880; Zhangjiagang traders 5850, down 50; Guangzhou traders 5780-5800, down 50; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil keeps steady in price, of which it settles at 8090-8190 yuan/tonne. (Fujian 8090; Guangdong and Guangxi not offered) Mills have little rapeseed in storage as there is not a date set for a thaw between China and Canada, and rapeseed oil stocks have been very low, especially spot goods, so they are stalling sales. This helps underpin rapeseed oil market. But mills are lured to buy up on soybeans due to handsome crush margins on the DCE, and they will pick up operation rates quickly this week and next week with adequate supply. Besides, the demand for oils has shrunk significantly as the catering industry is blown heavily by the severe novel coronavirus pneumonia. Therefore, rapeseed oil prices are weighed down to fluctuate. Overall, rapeseed oil market will be more resilient soybean oil due to tight supply, and buyers can stay on the sidelines for the moment. 

Cottonseed oil: Cottonseed oil is mostly unquoted today and individual prices are flat. The data show that the pneumonia epidemic had caused 78% of catering businesses to lose over 100% of revenues, and oils trading remained depressed after holiday. Even the demand for cottonseed oil is very limited. Consequently, very few deals were clinched on the market. Besides, oils on Dalian Commodity Exchange decline further today. On the spot market, soybean oil down by 30-100 yuan/tonne and palm oil drops by 50 yuan/tonne. Hence, cottonseed oil market is dragged down by all these factors. But only few oil mills will resume production in recent days, so the supply of cottonseed oil is very limited. Accordingly, cottonseed oil market also will be bolstered temporarily. With crush enterprises resuming the operation successively in the late period, cottonseed oil price may be at risk in dropping. Buyers can take a wait-and-see attitude.

(USD $1=CNY¥6.98)