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Daily Review on Markets for Oilseeds and Oils in China--5/13/2020

2020-05-13 www.cofeed.com
Today (May 13), the market for oilseeds and oils in China is shown as follows:
 
Oilseeds:

Imported soybean: Imported U.S. soybeans are quoted at 3500 CNY/tonne at ports today. Soybean stocks mount relatively higher at ports recently, and a monthly average of 10 mln tonnes of imported soybeans have begun to arrive at ports from this month to July, so port traders forecast a further rise in stocks. But soybean market is in weak trading now, as downstream buyers hold adequate stocks and lack of enthusiasm for buying. Hence, port traders are not confident in propping up prices, which is negative to the market. Overall, the market for imported soybeans is predicted to some downside potential in the near term due to dismal demand.

Cottonseed: Cottonseed prices keep steady and partly fluctuate by 0.02-0.04 CNY/kg today. Some traders are implementing previous contract, so the supply of cottonseed is gradually decreasing. And it still takes long time before new cottonseed comes into market, raising traders’ selling reluctance. But large quantity of imported soybean has just begun to arrive at ports successively, which will last until July. And soybean crush may almost equal to 2 mln tonnes this and next week, dragging down meals and oils market. In addition, the trading in cotton by-products goes not well, so inland oil mills suffer profit losses and are wary of purchasing cottonseed. Therefore, cottonseed price is predicted to fluctuate to adjust in a short term.

Oils: 

Summary: The USDA in its May report lowered old crop exports by 100 million bushels, leading to a higher-than-expected increase in old crop ending stocks, so U.S. soybean futures closed lower on Tuesday. Oil futures extend losses in early trading and soon fluctuate to rebound on the Dalian Commodity Exchange today. In the spot markets, soybean oil mostly declines by 10-40 CNY/tonne with a partial rise of 20 CNY/tonne and palm oil fluctuates by 10-50 CNY/tonne. Lower-level demand is rising, but the overall trading remain tepid. On Tuesday, China bought a cargo of Brazilian soybeans, and a state-owned firm purchased at least 8 U.S. cargoes. A picture where monthly soybean imports will get near to 10 mln tonnes in May-July has already been rolling out, so that soybean crush is expected to hit nearly 2 mln tonnes both this week and next week. But the oil market has been in subdued demand for two weeks, so that soybean oil stocks have been rising again. Besides, Malaysia's palm oil end-stocks in April jumped to 2.05 million tonnes due to higher output and sharply lower demand. And India is set to impose 180-day protective duties on refined palm oil imports from Malaysia, after suspending 39 import licenses for refined palm oil, which further cracks down the market sentiment. In spite of short-term bounces in oil futures, the overall domestic oil market is still predicted to fluctuate with a weakening pattern due to bearish factors. Buyers can keep light stockpiles and make small replenishment on the dips if out of stock, and remain cautious in chasing after higher prices. 

Soybean oil: GB Grade I soybean oil is mainly priced at 5410-5550 CNY/tonne in domestic coastal areas, mostly down by 10-40 CNY/tonne and a partial rise of 20 CNY/tonne. (Tianjin traders 5420-5430; Rizhao traders 5470; Zhangjiagang traders 5470; and Guangzhou traders 5420). 

Palm oil: RBD palm olein is mainly priced at 4560-4790 CNY/tonne in coastal areas, fluctuating by 10-50 CNY/tonne. (Tianjin traders 4690-4700, up 10; Rizhao traders 4790, up 30; Zhangjiagang traders 4720, up 50; Guangzhou traders 4560-4570,up 20; and Xiamen not available). 

Imported rapeseed oil: Imported rapeseed oil prices move higher today, of which it settles up 10-20 CNY at 7050-7180 CNY/tonne in coastal regions (Fujian 7180, down 30; Guangdong not available; and Guangxi 7050). Rapeseed crush remain low amid tensions between China and Canada, and rapeseed oil spots are also in tight supplies; hence, oil mills are mainly signing forward contracts, which helps support rapeseed oil market. However, Mills are under pressure with huge soybean imports from May to July, so that weekly soybean crush is forecast to climb toward 2 mln tonnes both this week and next week. Soybean oil stocks are rising in China, and palm oil stocks also grow at a sharp pace. In addition, global catering businesses are reeling under the coronavirus pandemic, which may also curb rises in rapeseed oil market. Overall, rapeseed oil market is predicted to follow futures to swing in the short run and remain not optimistic in the mid-to-long term. Buyers are suggested to stay cautious in chasing after higher prices.

Cottonseed oil: Cottonseed oil prices are mainly stable but down 50 CNY/tonne in some regions today. Due to more-than-expected production in April and a collapse in domestic demand, Malaysian palm oil stocks steeply increased by 18% to 2.05 mln tonnes late this month. In addition, the monthly arrival of soybeans will reach up to nearly 10 mln tonnes from May to July, seeing huge imports. And soybean crush will likely hit a super high of 2 mln tonnes this and next week. However, the demand for oils is weakening in recent two weeks, so soybean oil inventory picks up again. And spot soyoil mostly decreases by 10-40 CNY/tonne today, weighing down cottonseed oil market. But cottonseed is pricey due to little inventory and crushing mills in Xinjiang have many outstanding contracts. Accordingly, cottonseed oil market is also bolstered. But the weak trend of spot bulk oils would not change in the near term and trend of cottonseed oil has yet to be optimistic, so buyers can buy on immediate demand.

(USD $1=CNY ¥7.09)