Today (Jun 5), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: PNW soybeans are highly concentrated in the hand of very few traders at Shandong port, which bolsters PNW soybean prices to rise there. However, downstream customers do not totally accept high prices. Moreover, Brazilian soybean stocks are high at domestic ports and are offered at mixed prices. And soybean vessels from Argentina and Uruguay are about to arrive at ports. Besides, China is still purchasing US soybeans. Port soybean stocks will further increase, but the demand does not see a rise, which is negative to the imported soybean market. In a hybrid of the bull and the bear, short-term soybean market is predicted to keep range-bound.
Cottonseed: Cottonseed prices increase by 0.02-0.04 CNY/kg in individual regions today. The supply of cottonseed is decreasing and tightening continually, and trader bull the after-market, so they are reluctant to sell cottonseed and raise price. Besides, bulk oils all surge today, which is also positive for cottonseed market. But the operation rate among crushing mills stays at a low level, they are wary of purchasing cottonseed due to losses in crush margins. Therefore, the price of gross cottonseed delivered from Xinjiang to inland factories will likely fluctuate to stay strong in a short term.
Oils:
Summary: U.S. soybean futures continued to close sharply higher on Thursday as China was still making purchases and on a more competitive export prospect following weaker U.S. dollar. An oil mills based in south China was rejected in applying for the GMO certificate for rapeseed, according to market sources, so participants are concerned that China may take countermeasures against Canada on Huawei’s Meng Wanzhou case. Moreover, soybean oil traded well for a fourth consecutive day at over 70,000 tonnes yesterday. Hence, soybean oil futures rally on the Dalian Commodity Exchange (DCE) today. But DCE palm oil futures swing to adjust today, after Malaysia palm oil futures declined 3% as investors booked profits and on expectations for a rise in May inventory. In the spot markets, soybean oil mostly goes up 10-40 CNY/tonne and palm oil partially down 10-30 CNY/tonne. Soybean oil is predicted to be in decent trading on low basis. Despite all these factors, China’s soybean arrivals at ports will hit a monthly average of more than 10 mln tonnes between June and August, and domestic oil mills are maintaining very high operation rates. Besides, traders are forecasting that palm oil stocks will surge in Malaysia. Hence, the oil market may fluctuate when moving upward. Overall, the oil market will probably maintain its strengthening trend ahead of a detente between China and the United States. Participants are suggested to make appropriate replenishment on low basis, rather than chase after excessively high prices.
Soybean oil: GB Grade I soybean oil is mainly priced at 5740-5900 CNY/tonne in domestic coastal areas, mostly up 10-40 CNY/tonne. (Tianjin traders 5800; Rizhao traders 5740; Zhangjiagang traders 5860; and Guangzhou traders 5900).
Palm oil: RBD palm olein is mainly priced at 5180-5340 CNY/tonne in coastal areas, a partial decline of 10-30 CNY/tonne. (Tianjin traders 5300-5320, flat; Rizhao traders 5340, flat; Zhangjiagang traders 5270, flat; Guangzhou traders 5180, down 20; and Xiamen not available).
Rapeseed oil: U.S. soybean futures continued sharp rises on Thursday as China was still making purchases. And rapeseed oil futures also move higher on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil goes up 20-40 CNY at 7470-7610 CNY/tonne in coastal regions in thin trading. India is easing its lockdown restrictions across the country, so market participants are forecasting a significant rise in the demand for vegetable oils. In addition, China’s rapeseed and rapeseed oil imports from Canada have been limited since Meng Wanzhou did not get released. These together help bolster rapeseed oil market in China. However, China’s soybean arrivals at ports are expected to surpass a monthly average of 10 mln tonnes between June and August, and its weekly soybean crush maintains a high level of over 2 mln tonnes. And rapeseed oil market has seen no deal for days as buyers are cautious. Overall, short-term rapeseed oil prices is predicted to fluctuate at a high level.
Cottonseed oil: Cottonseed oil prices mainly keep steady and increase by 50-100 CNY/tonne in some regions today. USDA report revealed that China was still buying U.S. soybeans. And US soybeans become more competitive due to the weakness in USD, which led it to end much higher on Thursday. Except that, there was a rumor that an oil plant in South China was injected in applying for GOM certificate for rapeseed, raising concerns over China’s retaliation on Canada due to Meng Wanzhou’s case. Moreover, the trading volume of soybean oil jumped for the fourth consecutive day on Thursday, surpassing 70,000 tonnes in a single day. And it extended the rally after slight adjustment. Today, soybean oil on Dalian Commodity Exchange stopped the decline and continued rising again, and spot soybean oil mostly up by 10-40 CNY/tonne. In addition, the operation rate among cottonseed crushing mills kept going down and the costs were still high. Accordingly, cottonseed oil market was buoyed by these factors. Besides, seeing over 10 mln tonnes of soybean arrivals each month from June to August, the operation rate is super high and soybean oil stocks increase gradually. Thus, buyers are lack of enthusiasm in purchasing, and there are only few new orders of cottonseed oil. It is expected that cottonseed oil market will likely continue fluctuating to stay strong before an easing of U.S.-China tensions.
(USD $1=CNY ￥7.10)
