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Daily Review on Markets for Oilseeds and Oils in China--5/15/2020

Today (May 15), 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 dismal 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, and China is also buying up on US soybeans, so that traders now choose to stay on the sideline. In a hybrid of the bear and the bull, the market for imported soybeans is predicted to stay stable in the short run.
Cottonseed: Cottonseed prices keep steady and partly fluctuate by 0.02 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 the monthly arrivals of soybean will be close to 10 mln tonnes from May to July and the operation rate will picks up sharply, which will drag down meals and oils market. In addition, the trading in cotton by-products goes not well, so inland oil mills suffer from profit losses and are wary of purchasing cottonseed. Therefore, cottonseed price is predicted to fluctuate to adjust in a short term.
Summary: US soybean futures closed further lower on Thursday, as favorable crop weather bolstered an abundant soybean production outlook. But US soybean oil futures moved strong on unexpected export sales of 20,000 metric tons of soybean oil for delivery to China, and alongside low-level buying, oil futures rebound on the Dalian Commodity Exchange today. In the spot markets, soybean oil goes up 20-80 CNY/tonne and palm oil up 50-110 CNY/tonne, attracting some low-level deals. Palm oil is best performer in this round, bolstered by hopes for improving demand, as the Indonesian government is mulling ways to increase subsidies for biodiesel use and shipping data showed that Malaysia’s palm oil exports have improved periodically in May. But after all, palm oil stocks are rising in producing countries. Meanwhile, China’s soybean imports will hit a monthly average of nearly 10 mln tonnes from May to July, so that oil mills have sharply raised their operation rates. On the demand side, global catering businesses have not fully recovered, especially as the pandemic is still severe in several countries. Therefore, oil mills are slow in picking up goods and soybean oil stocks are also rising. Short-term oil market has been bolstered to rebound, but may still follow futures to fluctuate for a lack of bullish factors, and remain in a weak pattern overall. Buyers can keep light stockpiles at the moment. 
Soybean oil: GB Grade I soybean oil is mainly priced at 5400-5580 CNY/tonne in domestic coastal areas, a rise of 20-80 CNY/tonne . (Tianjin traders 5410-5430; Rizhao traders 5450; Zhangjiagang traders 5580; and Guangzhou traders 5400-5420). 
Palm oil: RBD palm olein is mainly priced at 4660-4880 CNY/tonne in coastal areas, up 50-110 CNY/tonne. (Tianjin traders 4740, up 50; Rizhao traders 4880, up 110; Zhangjiagang traders 4800, up 80; Guangzhou traders 4660, up 110; and Xiamen not available). 
Imported rapeseed oil: Imported rapeseed oil prices move further higher today, of which it settles up 10 CNY at 7100-7280 CNY/tonne in coastal regions (Fujian 7280, up 10; Guangdong not available; and Guangxi 7100, up 10). China and Canada has been in tensions for months, and Australia has fueled tensions with China in recent weeks, so that rapeseed imports may get affected in China. Domestic rapeseed crush has been at a low level for a long time, and oil mills are mainly making delivery of rapeseed oil contracts now, which help prop up the market. However, pressured by huge soybean imports of nearly 10 mln tonnes each from May to July, oil mills have briskly picked up operation rates, so soybean oil stocks will continue rising. Besides, Malaysia’s palm oil production has exceeded the forecast in April and its domestic demand has sharply decline. In addition, the pandemic has given a punch on global catering services. Bearish fundamentals will likely limit the rise in rapeseed oil prices. Overall, rapeseed oil market is predicted to follow futures to swing at the high level 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 monthly arrival of imported soybeans will reach up to nearly 10 mln tonnes from May to July, so the operation rate among crushing mills will promote significantly. But the catering industry has not entirely recovered yet amid the coronavirus pandemic, especially in foreign countries. In this case, the demand for oils is poor in market, so traders are not confident about the afternoon session, which depresses cottonseed oil market and leads trading to goes not well. But bulk oils rebound by 20-100 CNY/tonne today. Besides, cottonseed is pricey due to little inventory, and crushing mills in Xinjiang have many outstanding contracts. Accordingly, cottonseed oil market is also bolstered by these factors. However, it is not optimistic about the after-market due to the poor demand for cottonseed, so buyers can take a hand-to-mouth strategy.
(USD $1=CNY ¥7.09)