Today is 05/07/2021

Daily Review on Markets for Oilseeds and Oils in China--5/18/2020

Today (May 18), the market for oilseeds and oils in China is shown as follows:
Imported soybean: Imported PNW soybeans are quoted at 4100 CNY/tonne at ports today, a rise of 100 CNY/tonne from last Friday. The rumor that local government would conduct an investigation into GM-soybean still exist in the market, which underpins sales sentiment of port traders. However, the market is in dismal trading now, as downstream buyers lack of enthusiasm for buying. In addition, domestic soybean imports will are forecast to hit a monthly average of 10 mln tonnes from May to July, and China is also buying up U.S. soybeans now, so that traders now tend to stay on the sideline. Dominated by bullish factors, the market for imported soybeans is predicted to keep firm in the short run.
Cottonseed: Cottonseed prices mainly keep steady and partly fluctuate by 0.01-0.02 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: U.S. soybean futures closed higher last Friday on purchases by China. And also last Friday, the United States unveiled a rule to stop global manufacturers from sales to Huawei of semiconductors made with U.S. technology, which triggers concerns that China may make retaliatory sanctions against US companies. Hence, oil futures swing to move higher on the Dalian Commodity Exchange today on uncertainties in relations between China and the U.S.. In the spot markets, soybean oil posts a partial rise of 10-20 CNY/tonnes and palm oil up 10-70 CNY/tonnes, attracting some low-level purchases. Monthly soybean imports are expected to get near to 10 mln tonnes from May to July in China, and its weekly soybean crush is also forecast to climb over 2 mln tonnes in the coming two weeks. However, due to dismal demand, soybean oil stocks have increased by 3% to 870,000 tonnes as of last week. And recently, China bought a total of over 50 vessels of palm oil for deliveries in May-November. In addition, India has again extended its lockdown till the end of May, and has previously suspended import licenses of nearly 450,000 tonnes of refined palm oil. And the pandemic is still affecting global catering services. Short-term oil market may continue swinging to rebound, but the upward space will be little. The overall market will take a weakening trend unless weather conditions turn extremely unfavorable to soybean in US crop belt. Buyers can keep light stockpiles at the moment.
Soybean oil: GB Grade I soybean oil is mainly priced at 5440-5580 CNY/tonne in domestic coastal areas, a partial rise of 10-20 CNY/tonne. (Tianjin traders 5460-5450; Rizhao traders 5480; Zhangjiagang traders 5580; and Guangzhou traders 5440-5460). 
Palm oil: RBD palm olein is mainly priced at 4760-4930 CNY/tonne in coastal areas, up 10-70 CNY/tonne. (Tianjin traders 4780, up 40; Rizhao traders 4920-4930, up 10; Zhangjiagang traders 4860, up 30; Guangzhou traders 4760,up 70; and Xiamen not available). 
Imported rapeseed oil: Imported rapeseed oil prices move further higher today, of which it settles up 20-40 CNY at 7160-7340 CNY/tonne in coastal regions (Fujian 7290; Guangdong not available; and Guangxi 7160). 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 with existing stocks now. In the week ending May 15th, rapeseed oil stocks declined by 4% to 170,000 tonnes in coastal regions. However, soybean imports are forecast to hit a monthly average of nearly 10 mln tonnes from May to July, and weekly soybean crush is expected to climb over 2 mln tonnes in the coming two week, so soybean oil stocks will continue the uptrend. Besides, catering businesses have not fully resumed operations. And palm oil stocks are rising in Malaysia due to seasonally growing production. Hence, domestic rapeseed oil may have limited upward space. 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 mainly but down 50-150 CNY/tonne in some regions today. The monthly arrival of imported soybeans will reach up to nearly 10 mln tonnes from May to July, so soybean crush may increased to more than 2 mln tonnes in the coming two weeks. But soyoil stocks go up amid poor demand in China, so traders have not confidence in after-market of cottonseed oil. Thus, cottonseed oil market is depressed and it is hard to clinch deal. In addition, U.S. introduced a law last Friday to prevent global chip manufacturers from exporting chips to Huawei Technologies, fuelling fears of Chinese retaliation and raising uncertainties to China-U.S. trade relations. Besides, oils on Dalian Commodity Exchange (DCE) fluctuate to move higher. On the spot market, soybean oil partly up by 10-20 CNY/tonne and palm oil up by 10-70 CNY/tonne. Moreover, 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 ¥7.1)