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Daily Review on Markets for Oilseeds and Oils in China--25/2/2020

2020-02-25 www.cofeed.com
Today (Feb. 25), the market for oilseeds and oils in China is shown as follows:
 
Oilseeds:

Cottonseed: Cottonseed is mostly unquoted today, while some prices for Xinjiang cottonseed are flat. Pastures are in rigid demand, but there is not much cottonseed circulating in the market, which supports the cottonseed market. Besides, the novel coronavirus pneumonia epidemic has greatly hit catering industry, resulting in a sharp decline in cottonseed oil. And cottonseed meal price falls back from high levels. Moreover, oil plants in Xinjiang cannot resume production, so that some enterprises sell cottonseed in stock. Thus, cottonseed market is dragged down by these factors and predicted to moderately fall after totally resuming trading.

Oils: 

Summary: The novel coronavirus pneumonia suddenly quickened its spread in many regions such as South Korea, Middle East and Italy, so US soybean futures fell sharply last night on concerns over the contagion globally. And oil futures also broadly decline on the Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil decline by 90-150 yuan/tonne, and the trading is thin as buyers stay on the sidelines. The panic with the spreading coronavirus is hanging over global financial market, which has also lit concerns over commodity markets. In addition, as mills brought soybean crush higher to 1.80 mln tonnes last week, coupled with slow shipments, soybean oil stocks rose sharply by 17% to 1.20 mln tonnes. And mills are expected to pick up soybean crush to 1.85-1.87 mln tonnes both the next two weeks, so soybean oil stocks will probably hit 1.40 mln tonnes in March. On the other, the demand in the market is quite weak as leading catering enterprises have not recovered opening, so that some mills have been bothered with swelling stocks. Meanwhile, palm oil stocks also increased by 0.2% to 945,000 tonnes in China last week. And Malaysia’s palm oil output also grew by 33.6% in the first 20 days of February. With increasing pressure from its fundamentals, the oil market is predicted to extend a slightly weakening trend till the epidemic is under the effective control. Buyers can wait for the moment. 

Soybean oil: GB Grade I soybean oil is mainly priced at 5850-6120 yuan/tonne in domestic coastal areas, down by 90-150yuan/tonne. (Tianjin traders 5850-5860; Rizhao traders 5900; Zhangjiagang traders 6100-6120; and Guangzhou traders 5910). 

Palm oil: RBD palm olein is mainly priced at 5350-5550 yuan/tonne in coastal areas, mostly down by 120-140 yuan/tonne. (Tianjin traders 5500-552, down 140; Rizhao traders not offered; Zhangjiagang traders 5550; Guangzhou traders 5350-5370, down 120; and Xiamen yet offered). 

Imported rapeseed oil: Imported rapeseed oil goes down in price, of which it settles down 10-30 yuan at 7970-8090 yuan/tonne. (Fujian 7970; Guangdong and Guangxi not offered) While soybean crush has returned to a high level above 1.80 mln tonnes under higher operation rates in mills, the demand for edible oils has been weak since most catering businesses are unable to open under the coronavirus outbreak. In this case, soybean oil, palm oil and rapeseed oil both saw higher stocks last week, of which soybean oil saw a weekly increase of 17%. Therefore, the oil market has been under pressure. Nonetheless, rapeseed has been short of supply amid a stalemate between China and Canada, coupled with low operation rates in rapeseed oil mills, so rapeseed oil supply gets tightening in the spot market. Although it is more resilient than other oils, rapeseed oil market is also relatively weak overall. Buyers can stay on the sidelines for the moment. 

Cottonseed oil: Cottonseed oil is mostly unquoted today, while some offered prices are flat. Being affected by the pneumonia epidemic, catering enterprises have yet to recover, so the demand is always weak in oils market with few trading in cottonseed oil. Moreover, most enterprises do not offer the price as a result of no deals. Besides, oils on Dalian Commodity Exchange also broadly decline today. On the spot market, soybean oil and palm oil fall by 90-150 yuan/tonne. Consequently, cottonseed oil market is curbed. But the overall operation rate in oil plants stays at a low level now, which leads cottonseed oil to be resilient temporarily. With crush enterprises resuming the operation successively in the late period, cottonseed oil price may be at risk in going down. Buyers can take a wait-and-see attitude.

(USD $1=CNY¥7.02)