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China Soybean Weekly Report -- As of May 8, 2020

2020-05-12 www.cofeed.com
I. Soybean

Price

Domestic soybean: Dismal demand has slowed down shipments in domestic soybean market, and warmer weather in southern regions requires higher standard for soybean storage. Moreover, traders are in hurry to clear stocks as rapeseed and wheat are set to get marketed later this month. Besides, imported soybean prices are also putting pressure on domestic market. However, local farmers have little surplus in hand and some traders who expect a tight supply outlook are reluctant to sharply cut down prices, which give some support to the market. In a hybrid of the bear and the bull, domestic soybean market is likely to keep range-bound next week.

Imported soybean: Imported Argentine soybean prices still take on a weakening trend at ports today. Port soybean stocks have got a significant increase recently, and abundant crushing margins for imported soybeans on the DCE keep luring Chinese importers to make purchases. Soybean imports will be at an overwhelming level form May to July, with May at 9.87 mln tonnes and June at 10 mln tonnes, according to latest data surveyed by Cofeed. But soybean market is in weak trading now, as downstream buyers hold adequate stocks and lack of enthusiasm for buying. In addition, domestic soybean prices also extend a downtrend. However, traders are still concerned about soybean shipments in Brazil as coronavirus pandemic is still severe in this country. In the near term, the market for imported soybeans is predicted to keep steady with a weakening trend.








Crush: Oil mills have maintained lower-than-forecast operation rates due to the May Day holiday and soybean shortages in several mills this week (May 2-8). Soybean crush at domestic mills totals 1,749,500 tonnes (meal 1,382,105 tonnes and oil 332,405 tonnes), down 27,500 tonnes or 1.5% from 1,777,000 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) are 50.39%, down 0.79% from 51.18% in the previous week. Soybean crush will start the uptrend to around 1.98 mln tonnes and 2.01 mln tonnes in the next two weeks, respectively. 

As of this week, soybean crush nationwide totals 49,564,914 tonnes in the soybean crop year of 2019/20 (from October 1st, 2019), down 944,771 tonnes or 1.87% from 50,509,685 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 27,538,500 tonnes, up 180,215 tonnes or 0.07% from 27,358,285 tonnes of the corresponding period in 2019. 



Inventory: Soybean stocks go on mounting higher this week, as mills are busy unloading soybean cargoes. In the week as of May 8, imported soybean stocks in mills in domestic coastal regions total 3,178,600 tonnes in main domestic coastal oil mills, up 145,600 tonnes by 4.80% from 3,033,000 tonnes last week yet down by 32.39% from 4,702,000 tonnes of the same period last year. Soybean stocks will gradually build up alongside huge soybean arrivals from May to July.



Arrivals and the outlook: According to Cofeed, soybean arrivals are 30 cargoes with 1.954 mln tonnes this week, a total of 31 cargoes with 2.109 mln tonnes from May so far. The import is predicted to be 151 cargoes 9.865 mln tonnes for May, 10 mln tonnes for June, 9.6 mln tonnes for July, 8.5 mln tonnes for August and 7.5 mln tonnes for September. Statistics will be updated every week on account of variable and unstable buying.  

II. Soybean Meal

Price: Domestic soybean meal prices continue the decline this week (May 6-8). As of this Friday, prices mostly settles down 60-120 CNY at 2750-2850 CNY/tonne in domestic coastal regions. 




Inventory: Soybean meal stocks continue to increase at a quicker pace this week. In the week ending May 8, soybean meal stocks in mills in domestic coastal regions are 305,800 tonnes, up 126,200 tonnes by 70.27% from 179,600 tonnes last week yet down by 48.23% from 590,700 tonnes of the corresponding period last year. As weekly soybean crush is forecast to get near to 2 mln tonnes in coming two weeks, soybean meal stocks will likely continue to grow and the tight supply has basically eased.



III.Soybean Oil

Price: Domestic soybean oil prices drop for a fourth consecutive week this week (May 6-8). As of this Friday, the price for GB Grade I settles at 5470-5640 CNY/tonne in domestic coastal regions, a decline of 20-60 yuan/tonne. 





Inventory: Soybean oil stocks start an uptrend this week. In the week ending May 8, China’s commercial inventory has totaled 845,000 tonnes, up 32,850 tonnes by 4.04% from 812,150 tonnes last week, down 219,500 tonnes by 20.62% from 1,064,500 tonnes last month, and down 555,000 tonnes by 39.64% from 1,400,000 tonnes of the corresponding period last year. And the five-year average at the same period is 1,146,600 tonnes.