Today (May 27), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: Port soybean stocks have increased markedly, while the market is in tepid trading as downstream buyers lack of enthusiasm. Moreover, soybean vessels from Argentina and Uruguay are forecast to arrive in China in June. Traders now feel less confident and slightly loosen their quotes. Short-term imported soybean market may still have downside potential on bearish fundamentals. Besides, market traders now keep a close eye on China-US relations. US President Donald Trump suggested that his administration would take action against China this week over its move to enact a national security law over Hong Kong issues. It is necessary to see whether this will have an impact on China’s purchases of US soybeans.
Cottonseed: Cottonseed prices are stable today. The supply of cottonseed is continually decreasing, and it still takes long time before new cottonseed comes into market, raising traders’ selling reluctance. But soybean crush set a record high of 2.09 mln tonnes last week, leading to a consecutive rise in inventory of soybean oil and soybean meal. Being depressed by this, 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. Moreover, seeing low operation rate among inland oil mills, cottonseed trade is tepid. Therefore, the delivery price of Xinjiang gross cottonseed to inland factories will not decline in a short term and likely fluctuate to stay strong.
Oils:
Summary: U.S. stock and energy markets surged, as participants were upbeat about progress on a coronavirus vaccine and an economic recovery. Moreover, China had purchased 258,000 tonnes of US soybeans. Hence, U.S. soybean futures closed with gains on Tuesday. Oil futures also extend an uptrend on the Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil continue to increase by 30-70 CNY/tonne, attracting some low-level purchases. Soybean oil stocks keep rising on huge soybean imports, high soybean crush and dismal demand under the pandemic. However, market traders’ focus is mainly on China-US relations. US President Donald Trump suggested that his administration would take action against China this week over its move to enact a national security law over Hong Kong issues. Market participants are concerned about the implementation of the phase one trade deal between the two nations. The offshore exchange rate of CNY keep decreasing to 7.17, which lifts cost of import. DCE oil futures are thus bolstered to rebound. In addition, domestic palm oil stocks also remain relatively low, and mid-to-downstream buyers are expected to pick up demand with the reopening of schools. These together push the oil market to rebound further. Short-term oil may keep range-bound and bounce, the extent and time of which will depend on further development in relations between China and the US. Besides, the Canadian court will deliver a highly anticipated ruling Wednesday concerning the trial of Huawei Meng Wanzhou, and local media forecast a high probability that Meng will be released in court. Hence, rapeseed oil futures on the Zhengzhou Commodity Exchange is weaker than DCE soybean oil.
Soybean oil: GB Grade I soybean oil is mainly priced at5550-5680 CNY/tonne in domestic coastal areas, a rise of 30-70 CNY/tonne. (Tianjin traders 5550; Rizhao traders 5560; Zhangjiagang traders 5680; and Guangzhou traders 5590).
Palm oil: RBD palm olein is mainly priced at 4910-5090 CNY/tonne in coastal areas, up by 30-70 CNY/tonne. (Tianjin traders 5070, up 70; Rizhao traders 5090, up 50; Zhangjiagang traders 5000, up 30; Guangzhou traders 4910-4920, up 50; and Xiamen not available).
Imported rapeseed oil: U.S. stock and energy markets surged, as participants were upbeat about progress on a coronavirus vaccine and an economic recovery. Moreover, the weakness in US dollar also enhanced the export competition of US agricultural products, and China was purchasing US soybeans. Hence, U.S. soybean futures closed with gains on Tuesday. Oil futures extend an uptrend on the Dalian Commodity Exchange today, but rapeseed oil futures continue their small losses on the Zhengzhou Commodity Exchange, as the Canadian court will deliver a highly anticipated ruling Wednesday concerning the trial of Huawei Meng Wanzhou, and local media forecast a high probability that Meng will be released in court. Spot rapeseed oil drops by 20 CNY/tonne to settle at 7060-7210 CNY/tonne in coastal regions, still in thin trading. China’s soybean imports are huge and oil mills also maintain high operation rates for soybean crush, in addition to dismal demand under the pandemic, so soybean oil and rapeseed oil stocks are both increasing. Despite this, market traders’ focus is on China-US relations. US President Donald Trump suggested that his administration would take action against China this week over its move to enact a national security law over Hong Kong issues. Market participants are concerned about the implementation of the phase one trade deal between these two nations. The offshore exchange rate of CNY keep decreasing to 7.17, which lifts cost of import. And rapeseed crush in China is still at a low level. Short-term rapeseed oil prices will probably remain resilient to keep range-bound and stay high.
Cottonseed oil: Cottonseed oil prices stay stable with partial declines of 50-100 CNY/tonne today. The demand for oils is poor amid the coronavirus pandemic, so there are few new orders of cottonseed oil. Since markets were optimistic about the detent in coronavirus pandemic and recovery of economy, U.S. stocks and energy markets soared on Tuesday. And China brought in 258,000 tonnes of soybeans from U.S., leading to a surge in U.S. soybeans futures. For the moment, markets are focusing on Sino-US relations despite the huge arrival of soybeans and high operation rate among oil mills. President Donald Trump said U.S. were about to respond strongly to Chinese security legislation on Hong Kong and would announce it before the weekend, raising markets concerns over the implement of trade deal amid inflamed tensions between U.S. and China. Consequently, the exchange rate of offshore RMB plunged to 7.17 CNY/USD, which pushed up import cost. Besides, oils on Dalian Commodity Exchange today continue moving higher, and spot soybean oil and palm oil further rise by 30-70 CNY/tonne. Moreover, cottonseed price remains high and the operation rate stays at a low level. Thus, these factors are bullish for cottonseed oil market. It is expected that cottonseed oil market may not fall too much in a short term. Buyers can make small replenishment upon low and stable price.
(USD $1=CNY ￥7.11)
