Today (Feb. 17), the market for oilseeds and oils in China is shown as follows:

 

Cottonseed: Xinjiang cottonseed is quoted today and delivered to pastures. And a minority of oil mills have resumed production. But Xinjiang cottonseed can’t be transported to inland due to logistics constraints and inland ginneries have not returned to work yet. And oil mills have a difficulty in purchasing cottonseed due to the road closures in villages and towns so that they 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.

Summary: US soybean futures closed with losses, subdued by concerns over less exports to China under the spread of the novel coronavirus pneumonia and by estimates for abundant harvests in South America. But oil futures rebound technically today, as the bearish atmosphere has been digested to some extent by previous declines. In the spot markets, soybean oil steadily fluctuate by 20-50 yuan/tonne and palm oil up 50-70 yuan/tonne, both in tepid trading with some low-level purchases. Chinese importers are scooping up on soybeans in Brazil and US PNW in view of good crush margins, and soybean meal market is also in good trading; hence, soybean crush rose further by 100% to 1.57 mln tonnes last week and will jump higher to nearly 1.80 mln tonnes in both next two weeks. However, as the catering industry has been hit hard by the epidemic, soybean oil market has been weak with the average trading volume of only 1,876 tonnes per day since February, well below a normal level of 20,000 tonnes. In this case, soybean oil stocks surged by 15% to 1.03 mln tonnes in the week ending February 14th, and some mills have been bothered by swelling stocks. In the meantime, as India has suspended palm oil imports from Malaysia, Malaysia’s exports to India has seen a year-on-year decline of 85% in January. And data from ITS showed that Malaysia’s palm oil exports in the first half of February fell by 6.7% from the same period last month. Therefore, BMD palm oil futures are also under pressure. On the whole, the oil market may welcome technical bounce in the short term after some declines, but the space may be small and the market may fluctuate repeatedly at low levels. Buyers out of stock are suggested to make some replenishment on the dips and not to chases after excessively high prices. 

Soybean oil: GB Grade I soybean oil is mainly priced at 6150-6450 yuan/tonne in domestic coastal areas, partially fluctuating by 20-50 yuan/tonne. (Tianjin traders 6150-6170; Rizhao traders 6220; Zhangjiagang traders 6450; and Guangzhou traders 6230). 

Palm oil: RBD palm olein is mainly priced at 5830-5960 yuan/tonne in coastal areas, up by 50-80 yuan/tonne. (Tianjin traders 5870-5880, up 50; Rizhao traders 5950-5960, up 80; Zhangjiagang traders 5900, up 50; Guangzhou traders 5810, up 50; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil rises in price, of which it settles up 80-100 yuan at 8210-8310 yuan/tonne. (Fujian 8210; 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. Rapeseed oil stocks only total 290,000 tonnes in East China and 61,000 tonnes in the south, so mills are stalling sales now. These factors are propping up the market now. But due to handsome crush margins on the DCE, Chinese importers are buying up on Brazilian soybeans to book profits. And mills also picked up soybean crush by 100% to 1.57 mln tonnes in the week ending February 14th, and will continue to pick it up to a high level of nearly 1.80 mln tonnes in both next two weeks. Moreover, the oil market has been in weak trading as the demand for oils has been subdued sharply after the catering industry was hit heavily. Buyers are suggested not to chase after excessively high prices. 

Cottonseed oil: Cottonseed oil is mostly unquoted today and some quoted decline by 400 yuan/tonne compared to before holiday. 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, depressing cottonseed oil price. But the operation rate in oil plants is very low at the moment. With crush enterprises resuming the operation successively in the late period, cottonseed oil price may be at high risk in dropping. Buyers can take a wait-and-see attitude.