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Daily Review on Markets for Oilseeds and Oils in China--5/14/2020

Today (May 14), the market for oilseeds and oils in China is shown as follows:

Imported soybean: Imported U.S. soybeans are quoted slightly higher by 50 CNY/tonne at 4000 CNY/tonne at ports today. A market rumor said that Xi’an, capital of Shaanxi province, would conduct an investigation into GM-soybean, which underpins sales sentiment in the market. However, the market is in thin trading now, as downstream buyers hold adequate stocks and lack of enthusiasm for buying. In addition, A picture where monthly soybean imports will get near to 10 mln tonnes in May-July has already been rolling out, which will add to port stocks later. Market participants are staying on the sideline now, and the market for imported soybeans is predicted to stay stable with a weakening trend in the short run.

Cottonseed: Cottonseed prices keep steady 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.


Summary: U.S. soybean futures closed further lower on Wednesday on the forecast for favorable weather conditions in the U.S. Midwest. U.S. soybean now are 38% planted, far above a five-year average of 23%. On the Dalian Commodity Exchange today, soybean oil moderately falls and palm oil also stays below the previous close. In the spot markets, soybean oil drops by 30-70 CNY/tonne and palm oil down 40-50 CNY/tonne, both in tepid trading. A Chinese state-owned firm has been buying up on U.S. soybeans this week, with the total volume up to 1-1.2 mln tonnes. And according to reports by the USDA, China has bought a total of 8 cargoes or 532,000 tonnes this week. 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 output has been higher than the forecast in April and domestic demand has suffered a sharp decline. In addition, the oil stocks are mounting higher as global catering businesses have been reeling under the pandemic. In a myriad of bearish factors, the oil market will probably fluctuate with a weakening trend, and buyers can wait or take hand-to-mouth buying.

Soybean oil: GB Grade I soybean oil is mainly priced at 5360-5520 CNY/tonne in domestic coastal areas, a decline of 30-70 CNY/tonne . (Tianjin traders 5360-5380; Rizhao traders 5420; Zhangjiagang traders 5520; and Guangzhou traders 5330-5350). 

Palm oil: RBD palm olein is mainly priced at 4540-4770 CNY/tonne in coastal areas, down 40-50 CNY/tonne. (Tianjin traders 4680-4690, down 40; Rizhao traders 4770, down 50; Zhangjiagang traders 4710, down 40; Guangzhou traders 4540-4560,down 50; and Xiamen not available). 

Imported rapeseed oil: Imported rapeseed oil prices move further higher today, of which it settles up 20-40 CNY at 7090-7270 CNY/tonne in coastal regions (Fujian 7270; Guangdong not available; and Guangxi 7090). Rapeseed crush remain low amid tensions between China and Canada, and oil mills are mainly signing forward contracts, which help support rapeseed oil market. However, soybean imports are pegged at a monthly average of nearly 10 mln tonnes from May to July, and weekly soybean crush is also expected to get near to 2 mln tonnes both this week and next week; hence, soybean oil stocks will continue rising. Besides, Malaysia’s palm oil stocks have also sharply increased, which further cracks down market sentiment. Bearish fundamentals will likely limit the rise in rapeseed oil prices. 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 stable today. The quantity of soybean purchased by a state-owned enterprise will reach 1-1.2 mln tonnes of soybean this week. And the monthly arrival of soybeans will reach up to nearly 10 mln tonnes from May to July, seeing huge imports. In this case, soybean crush will likely hit a super high of 2 mln tonnes this and next week. However, the demand for oils is poor in recent two weeks, so soybean oil inventory picks up again. Besides, soybean oil on Dalian Commodity Exchange moderately falls today. On the spot market, soybean oil down by 30-70 CNY/tonne and palm oil down by 40-50 CNY/tonne. Hence, cottonseed oil market is weighed down. 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 overall bulk oils will continue weakening with fluctuations in the near term and trend of cottonseed oil has yet to be optimistic, so buyers can take a wait-and-see attitude.

(USD $1=CNY ¥7.09)