Today (May 28), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: Port soybean stocks have increased markedly, and soybean vessels from Argentina and Uruguay are forecast to arrive in China in June, though the market is in tepid trading as downstream buyers lack of enthusiasm. Short-term imported soybean market may still remain weakening on bearish fundamentals. Besides, US President Donald Trump suggested that his administration would impose sanctions on China this week in response to China's deliberation on Hong Kong-related national security legislation, and China said that it would take all necessary measures to hit back; at this point, tensions get escalating again between the two nations. It is necessary to see whether this will have an impact on China’s purchases of US soybeans.
Cottonseed: Cottonseed prices are stable today. It still takes long time before new cottonseed comes into market, and the supply of cottonseed is continually decreasing, raising traders’ selling reluctance. Due to few new orders of cottonseed oil and cottonseed meal, crushing mills suffer from profit losses and force price down to take a purchase. Moreover, with the forthcoming wheat harvest, many inland oil mills plan to halt the operation and are wary of purchasing cottonseed. 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. soybean futures firmed on Wednesday. And a Canadian court on Wednesday announced its ruling on Meng Wanzhou case, and Meng did not get released as expected. Hence, rapeseed oil futures surge over 3% on the Zhengzhou Commodity Exchange on more strained relations between China and Canada, and oil futures on the Dalian Commodity Exchange are also boosted to go firmed. In the spot markets, soybean oil goes up 10-60 CNY/tonne and palm oil up 50-70 CNY/tonne. Buyers mostly bought the dips in the last few days, and oil futures have also gradually narrowed down rises after jumping higher in early trade, which together lessen buyers’ enthusiasm, so the trading is predicted to be smaller today. Malaysia’s palm oil output may cut its rises in May after a sharp monthly increase in April. The production in the first 25 days declined by 6% month on month, according to SPPOMA. Domestic soybean oil stocks are not saddled with stress now, and palm oil stocks are also relatively low. Besides, mid-to-downstream buyers are expected to pick up demand with the reopening of schools. U.S. President Donald Trump suggested that his administration would impose sanctions on China this week in response to China's deliberation on Hong Kong-related national security legislation, and China said that it would take all necessary measures to hit back; at this point, tensions continue to build between the two nations, and the exchange rate of CNY decreases sharply, which lifts the cost of soybean imports. Hence, oil prices continue bouncing. However, domestic soybean imports are huge and oil mills will maintain operation rates at a very high level. There are still bearish fundamentals in the market, though participants focus more on relations between China and the U.S..
Soybean oil: GB Grade I soybean oil is mainly priced at 5600-5730 CNY/tonne in domestic coastal areas, a rise of 10-60 CNY/tonne. (Tianjin traders 5600; Rizhao traders 5630; Zhangjiagang traders 5730; and Guangzhou traders 5630).
Palm oil: RBD palm olein is mainly priced at 4990-5180 CNY/tonne in coastal areas, up by 50-70 CNY/tonne. (Tianjin traders 5120-5140, up 50; Rizhao traders 5180, up 70; Zhangjiagang traders 5100, up 50; Guangzhou traders 4990, up 60; and Xiamen not available).
Imported rapeseed oil: U.S. soybean futures firmed on Wednesday. And a Canadian court on Wednesday announced its ruling on Meng Wanzhou case, in which Meng lost the key court fight and would have to stay in Canada for more hearings. Hence, rapeseed oil futures surge on the Zhengzhou Commodity Exchange today to lead all oils futures markets. Spot rapeseed oil jumps sharply higher by 230 CNY/tonne to settle at 7290-7440 CNY/tonne in coastal regions, still in thin trading. US President Donald Trump suggested that his administration would impose sanctions on China in response to China's deliberation on Hong Kong-related national security legislation, and China said that it would take all necessary measures to hit back; at this point, tensions continue to build between the two nations, and the exchange rate of CNY decreases sharply, which lifts import cost. Tensions have risen again between China and Canada, so that market participants are worried that it will further bring disaster to rapeseed and rapeseed oil trade. Overall, rapeseed oil market is predicted to stay at the high level. However, soybean imports are huge and soybean crush remains high, while the demand for oils is still tepid under the pandemic. Hence, the driver in the market now is mainly the political factors, and buyers are suggested not to chase after excessively high prices.
Cottonseed oil: Cottonseed oil prices stay stable with partial increase of 50 CNY/tonne today. U.S. soybean futures rose further last night. Besides, the ruling on the extradition trial of Huawei’s CFO Meng Wanzhou was announced by a Canadian court on Wednesday and she failed to be released, which deteriorated relations between Ottawa and Beijing. In this case, rapeseed oil on Zhengzhou Commodity Exchange jumps more than 3% today, pushing oils on Dalian Commodity Exchange to post strongly. With many universities and colleges opening successively, middle-lower demand for oils is likely to improve. In addition, U.S. President Donald Trump claimed to sanction China over Chinese national security legislation on Hong Kong before the weekend, while China declared to take counter measures, inflaming tensions between U.S. and China. In this case, the exchange rate of CNY plunged, which pushed up cost for importing soybean. On the spot market, soybean oil up by 10-60 CNY/tonne and palm oil up by 50-70 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. But the operation rate among soyoil mills will stays at high level in later period amid huge arrival of soybean. Thus, it is bearish for oils fundamentals, and there are only few new orders of cottonseed oil. It is expected that short-term cottonseed oil market may fluctuate to rebound moderately.
(USD $1=CNY ￥7.13)
