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Daily Review on Markets for Oilseeds and Oils in China--26/2/2020

2020-02-26 www.cofeed.com
Today (Feb. 26), 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 decline. The novel coronavirus pneumonia epidemic has resulted in a sharp decline in cottonseed oil, and cottonseed meal price falls back from high levels. Moreover, Xinjiang tightens the traffic controls, making it difficult for cottonseed to reach inland. In addition, most oil plants in Xinjiang have not resumed production yet, limiting the trading volume in cottonseed market. Thus, cottonseed market is dragged down. Nevertheless, pastures are in rigid demand, but there is not much cottonseed circulating in the market, which limits the price declines of cottonseed. It is predicted that cottonseed market will moderately fall after totally resuming trading. 

Oils: 

Summary: US soybean futures bounced last night, as dryness in some parts of Argentina might damage the potential production. But the market forecast a decline in Malaysian palm oil exports under the spread of the novel coronavirus pneumonia, so BMD palm oil futures collapsed to the lowest since November last night. Oil futures continue to fall on the Dalian Commodity Exchange today. In the spot markets, soybean oil declines by 20-50 yuan/tonne and palm oil down by 90-110 yuan/tonne, both in tepid trading. Malaysia’s palm oil output grew by 33.6% in the first 20 days of February, but due to lower demand from China under the outbreak of the epidemic, its exports saw a year-on-year decline of 3% on Feb 1st-25th. And in China, while oil mills may pick up soybean crush to 1.85 mln tonnes this week, the demand is slow in the market when leading catering businesses are unable to open. The daily average delivery in soybean oil market is only 15,208 tonnes since February, far below 32,552 tonnes last year. As a result, soybean oil stocks jumped rapidly higher to around 1.20 mln tonnes, and some mills have been full of stocks. Meanwhile, domestic palm oil stocks also rose to 945,000 tonnes last week. The epidemic with bearish fundamentals will force soybean oil and palm oil to keep a weakening trend for a while. Buyers are suggested to wait for low and stable prices to make replenishment in small batch. 

Soybean oil: GB Grade I soybean oil is mainly priced at 5820-6100 yuan/tonne in domestic coastal areas, down by 20-50 yuan/tonne. (Tianjin traders 5820; Rizhao traders 5870; Zhangjiagang traders 6100; and Guangzhou traders 5870). 

Palm oil: RBD palm olein is mainly priced at5280-5500 yuan/tonne in coastal areas, mostly down by 90-110yuan/tonne. (Tianjin traders5430, down 90; Rizhao traders 5500; Zhangjiagang traders5390, down 110; Guangzhou traders 5280, down 90; 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) Rapeseed is in low crush volume as its supply is tightened by a stalemate between China and Canada. There is little spot goods available in rapeseed oil market, and mills are mostly signing far-month contracts of Grade IV rapeseed oil, thus propping up the market. But a majority of catering businesses are unable to open subject to the epidemic, so the demand for edible oils is still extremely dismal. In this case, some mills are bothered with swelling soybean oil stocks. And edible palm oil stocks are also rising at ports, to nearly 950,000 tonnes at present. With a weakening trend in soybean oil and palm oil market, rapeseed oil is also unable to buck the trend. Buyers can stay on the sidelines for the moment. 

Cottonseed oil: Cottonseed oil is mostly unquoted today, while some offered prices drop by 100 yuan/tonne. 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. Additionally, it is predicted that the novel coronavirus will cause lower Malaysian palm oil export. Yesterday, palm oil on Bursa Malaysia Derivatives (BMD) plunged and hit a record low since November. Besides, oils on Dalian Commodity Exchange pare gains today. On the spot market, soybean oil down by 20-50 yuan/tonne and palm oil down by 90-110 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¥7.01)