Today (May 22), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: Domestic port traders are quoting steadily, as the market is affected by a rumor about an investigation into GM-soybeans. But there is no any fresh cues on the investigation, so participants gradually become ignoring of it. Moreover, the market is in dismal trading now, as downstream buyers lack of enthusiasm for buying. Meanwhile, China is likely to continue US soybean purchases, and Brazil’s exports of agriculture products still stay strong. In addition, domestic soybean imports will are forecast to hit a monthly average of 10 mln tonnes from May to July. In a hybrid of the bull and the bear, the market for imported soybeans is predicted to keep firm in the short run.
Cottonseed: Cottonseed prices mainly keep steady with a fluctuation of 0.02 CNY/kg today. The supply of cottonseed is gradually decreasing due to ranchers’ purchase. And it still takes long time before new cottonseed comes into market, raising traders’ selling reluctance. And the high-priced cottonseed is mainly purchased by ranchers. But the monthly arrivals of soybean will be close to 10 mln tonnes from May to July and soybean crush may reach a super high of 2 mln tonnes over the next two weeks, leading to a consecutive rise in inventory of soybean oil and soybean meal. Being depressed by this case, the trading in cottonseed oil and cottonseed meal goes not well, so inland oil mills suffer from profit losses and force price down to take a purchase. As the buying and selling are limited amid a market stalemate, cottonseed price is predicted to fluctuate to adjust in a short term.
Oils:
Summary: U.S. soybean futures closed sharply lower on Thursday as tensions turned more strained between the U.S. and China. Oil futures also swing to fall on the Dalian Commodity Exchange today. In the spot markets, soybean oil goes down 30-70 CNY/tonne and palm oil down 10-60 CNY/tonne, both in tepid trading.
China’s monthly soybean imports will hit an average of nearly 10 mln tonnes from between May and July, which drives oil mills to ramp up operation rates significantly. Moreover, a foreign-owned firm in northern China purchased 80,000 tonnes of soybean oil from South America for June delivery, which is expected to arrive at domestic port in August. The demand for oils is dismal at present, as catering businesses have not yet resumed operation under the pandemic.
On Wednesday, the U.S. Senate passes a new legislation--Holding Foreign Companies Accountable Act, which was generally regarded as an arrow to China and could ultimately bar many Chinese companies from listing shares on U.S. exchanges. And China will introduce legislation for its Hong Kong Special Administrative Region to safeguard national security, according to a spokesperson of China’s National People’s Congress on Thursday. After that, the U.S. President Donald Trump told reporters that “if it happens we’ll address that issue very strongly”. The U.S. President had groundlessly blamed China for its handling of the pandemic. Global stock markets and commodity exchanges broadly fell on escalating tension in relations between these two countries. Hence, domestic oil prices are also under pressure.
However, Indonesia has announced to unveil subsidies for B30 blending mandate, and India has also resumed purchases of Malaysia’s palm oil. In addition, market participants are concerned about logistics in Brazil, as the pandemic is severe in this country, with its confirmed cases surpassing that of Russia to become the world's second coronavirus hotspot. Meanwhile, the market is paying more and more attention to weather conditions in the U.S. crop belt. Hence, the oil market is getting stronger support. Overall, the oil market is predicted to have limited downside space and may follow futures to fluctuate in the short run. Buyers can wait for low and stable prices to make appropriate replenishment.
Soybean oil: GB Grade I soybean oil is mainly priced at 5420-5550 CNY/tonne in domestic coastal areas, mostly down 30-70 CNY/tonne. (Tianjin traders 5430; Rizhao traders 5450; Zhangjiagang traders 5550; and Guangzhou traders 5420-5450).
Palm oil: RBD palm olein is mainly priced at 4740-4880 CNY/tonne in coastal areas, mostly down 10-60 CNY/tonne. (Tianjin traders 4860, down 10; Rizhao traders not available; Zhangjiagang traders 4880, down 50; Guangzhou traders 4740, down 60; and Xiamen not available).
Imported rapeseed oil: Imported rapeseed oil price falls today, of which it settles down 50-70 CNY at 7190-7370 CNY/tonne in coastal regions (Fujian 7200; Guangdong not available; and Guangxi 7070). China’s monthly soybean imports will hit an average of nearly 10 mln tonnes from between May and July, which drives oil mills to ramp up operation rates significantly. The demand for oil and fats is in poor shape as catering businesses are crippling under the pandemic. Hence, rapeseed oil market is under pressure. However, China’s rapeseed crush has been staying at a low level, as China and Canada have been at a deadlock. And oil mills can only make delivery of contracts as rapeseed oil is in tight supplies. Overall, rapeseed oil market is predicted to follow futures to fluctuate in the short run, and its outlook needs to be seen with caution. Buyers can stay on the sideline at present.
Cottonseed oil: Cottonseed oil prices are stable with some declines of 50 CNY/tonne today. The monthly arrival of imported soybeans will reach up to nearly 10 mln tonnes from May to July, so soybean crush may increase to an extremely high level of 2 mln tonnes for the next two weeks. Also, soybean oil stocks will be trending up in the coming weeks. On the other hand, U.S. Senate passed a bill that said to be aimed at China on Wednesday, which could prevent Chinese firms from going public in U.S.. And a Chinese official said on Thursday that China is set to impose new national security legislation on Hong Kong, drawing a warning from President Donald Trump that Washington would react “very strongly”. In consequence, global stocks slumped and U.S. soybeans plummeted last night. Also, oils on Dalian Commodity Exchange fall back with fluctuations today, and spot soybean oil down by 30-70 CNY/tonne. Therefore, cottonseed oil market is weighed down by these factors. But the high cost, coupled with low operation rate also support the market. It is predicted that short-term cottonseed oil market may fluctuate to adjust. Buyers can buy on immediate demand.
(USD $1=CNY ￥7.09)
