China Soybean Weekly Report -- As of May 29, 2020

2020-06-02 www.cofeed.com

I.Soybean

Price

Domestic soybean: Some traders have been lowering down their quotes for soybeans in order to clear storage for wheat and recoup cash, and the market may come to a halt as some traders have turned to wheat market. However, traders now have lighter sentiment to continue lowering down prices as they have completed the clearance during the weekend. And downstream buyers are said to have almost consumed their stocks and begun to make inquiries. In addition, local farmers now have little surplus in hand. Traders are forecasting a tight supply outlook in soybean market, especially in the northeastern regions. In a hybrid of the bull and the bear, domestic soybean market is predicted to keep steady in the near term.

Imported soybean: Soybean stocks have been rapidly increasing at Shandong port, with one cargo from PNW during last weekend and some vessels from Brazil this week. And there will be soybean vessels from Argentina and Uruguay in June. Meanwhile, the market is in tepid trading as downstream buyers lack of enthusiasm. Overall, imported soybean market may still have some decline potential next week due to a glut. However, China’s National People’s Congress this week approved the proposal with a big majority to enact a new national security law for Hong Kong, and Bloomberg reported that U.S. President Donald Trump said he would announce new sanctions on China this Friday. And White House economic adviser Larry Kudlow said the US would call to account China on Hong Kong-related issues. The escalating US-China tension have brought uncertainty in China’s purchases of US soybeans. In addition, a ship at a berth at Brazil’s Paranaguá port earlier this week was ordered into quarantine following a positive COVID-19 test on a crew member, so it is nessary to keep a lose on whether soybean shipments will be affected at local ports.

Crush: Following a slight decline in operation rates this week (May 23-29), soybean crush at domestic mills totals 2,066,100 tonnes (meal 1,632,219 tonnes and oil 392,559 tonnes), down 31,400 tonnes or 1.4% from 2,097,500 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) are 59.51%, down 0.9% from 60.41% in the previous week. Soybean crush will continue the decline next week to 1.98 mln tonnes due to soybean shortages and swelling soybean meal inventories, but it will pick up again to 2.04 mln tonnes that following week, according to Cofeed.

Soybean crush nationwide is estimated at 8.63 mln tonnes in May at current utilization rate, far above 5.7296 mln tonnes in the previous month and also above 7.8181 mln tonnes of the corresponding period last year.

As of this week, soybean crush nationwide totals 55,589,414 tonnes in the soybean crop year of 2019/20 (from October 1st, 2019), down 479,771 tonnes or 0.8% from 56,069,185 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 33,605,900 tonnes, up 688,115 tonnes or 2.09% from 32,917,785 tonnes of the corresponding period in 2019.

Inventory: Soybean stocks continue rising in coastal regions this week as mills are busy unloading soybean cargoes, but the rise is small as soybean crush remains at a high level of 2.06 mln tonnes. In the week as of May 29, imported soybean stocks in mills in domestic coastal regions total 4,527,300 tonnes, up 26,800 tonnes by 0.60% from 4,500,500 tonnes last week and up by 4.15% from 4,346,800 tonnes of the same period last year. Soybean stocks will gradually build up alongside huge soybean arrivals from June to August.

Arrivals and the outlook: According to Cofeed, soybean arrivals are 23 cargoes with1.503 mln tonnes this week, a total of 141 cargoes with 9.2343 mln tonnes for May so far. The import is predicted to be 159 cargoes or 10.441 mln tonnes for June, 10.1 mln tonnes for July, 9.5 mln tonnes for August and 8 mln tonnes for September. Statistics will be updated every week on account of fresh buying and renewed shipments.

China's Customs:

II.Soybean Meal

Price: Domestic soybean meal prices first rose and then declined this week (May 25-29). As of this Friday, prices settles up 20-60 CNY at 2630-2760 CNY/tonne in domestic coastal regions.

Inventory: Soybean meal stocks continue the uptrend for a sixth consecutive week this week as soybean crush still stays at a very high level. In the week ending May 29, soybean meal stocks in mills in domestic coastal regions are 641,600 tonnes, up 120,600 tonnes by 23.15% from 521,000 tonnes last week and up 0.10% from 640,900 tonnes of the corresponding period last year. Soybean meal stocks will likely continue increasing, as soybean crush is forecast to stay high at 1.98 mln tonnes and 2.04 mln tonnes in the next two weeks, respectively.

China's Customs:

III.Soybean Oil

Price: Domestic soybean oil prices break off the decline to bounce sharply this week (May 25-29). As of this Friday, the price for GB Grade I settles at 5710-5820 CNY/tonne in domestic coastal regions, an increase of 180-350 CNY/tonne from last week.

Inventory: Soybean oil stocks continue the uptrend this week. In the week ending May 29, China’s commercial inventory has totaled 931,650 tonnes, up 42,500 tonnes by 4.78% from 889,150 tonnes last week, up 111,650 tonnes by 13.62% from 820,000 tonnes last month, yet down 489,850 tonnes by 34.46% from 1,421,500 tonnes of the corresponding period last year. And the five-year average at the same period is 1,130,400 tonnes.

China's Customs:

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