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China Soybean Weekly Report -- As of May 15, 2020

2020-05-19 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 in southern regions are in hurry to clear stocks as rapeseed and wheat are set to get marketed later this month. 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. Overall, as consumption is still slack now, domestic soybean market is likely to steadily fluctuate with a weakening trend in the short run.
 
Imported soybean: China has been back to U.S. soybean market, and its monthly soybean imports are forecast to hit nearly 10 mln tonnes from May to July. In the meantime, downstream buyers are slow making purchases due to adequate stocks, and domestic soybean prices are extending a downtrend. These are negative to imported soybean market. However, a market rumor said that Xi’an, capital of Shaanxi province, would conduct an investigation into local GM-soybean flow, which underpins sales sentiment in the market. In a hybrid of the bull and the bear, imported soybean market is predicted to steady next week, and participants can keep an eye on port arrivals and domestic demand.
 
 
 
 
 
Crush: As oil mills have picked up operation rates this week (May 9-15), soybean crush at domestic mills totals 1,912,200 tonnes (meal 1,510,638 tonnes and oil 363,318 tonnes), up 162,700 tonnes or 9.29% from 1,749,500 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) are 55.07%, up 4.68% from 50.39% in the previous week. Soybean crush will continue its uptrend to around 2.01 mln tonnes and 2.05 mln tonnes in the next two weeks, respectively. 
 
As of this week, soybean crush nationwide totals 51,418,814 tonnes in the soybean crop year of 2019/20 (from October 1st, 2019), down 1,026,471 tonnes or 1.96% from 52,445,285 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 29,4435,300 tonnes, up 141,415 tonnes or 0.05% from 29,293,885 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 15, imported soybean stocks in mills in domestic coastal regions total 4,019,300 tonnes in main domestic coastal oil mills, up 840,700 tonnes by 26.45% from 3,178,600 tonnes last week yet down by 12.51% from 4,594,100 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 40 cargoes with 2.621 mln tonnes this week, a total of 71 cargoes with 4.64 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, 9.9 mln tonnes for July, 9.2 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 downtrend this week (May 11-15). As of this Friday, prices mostly settles down 100-150 CNY at 2600-2710 CNY/tonne in domestic coastal regions. 
 
 
 
Inventory: Soybean meal stocks continue the uptrend this week as soybean crush climbs to a high level of 1.91 mln tonnes. In the week ending May 15, soybean meal stocks in mills in domestic coastal regions are 367,600 tonnes, up 61,800 tonnes by 20.21% from 305,800 tonnes last week yet down by 40.38% from 616,600 tonnes of the corresponding period last year. As weekly soybean crush is forecast to hit a very high level of around 2 mln tonnes in coming two weeks, soybean meal stocks will likely continue the growth.
 
 
III.Soybean Oil
 
Price: Domestic soybean oil prices drop for a fifth consecutive week this week (May 11-15). As of this Friday, the price for GB Grade I settles at 5440-5570 CNY/tonne in domestic coastal regions, a decline of 10-90 CNY/tonne. 
 
 
 
Inventory: Soybean oil stocks continue the uptrend this week. In the week ending May 15, China’s commercial inventory has totaled 868,330 tonnes, up 23,330 tonnes by 2.76% from 845,000 tonnes last week, down 71,670 tonnes by 7.62% from 940,000 tonnes last month, and down 561,800 tonnes by 39.26% from 1,429,500 tonnes of the corresponding period last year. And the five-year average at the same period is 1,102,400 tonnes. As oil mills continue picking up operation rates, soybean oil stocks will probably keep rising for weeks to come.