Today (Jun 8), 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 helps underpin PNW soybean prices there. However, downstream customers do not totally accept high prices. Moreover, Brazilian soybean stocks have amounted to 120,000 tonnes at ports and are offered at mixed prices. In addition, soybean vessels from Argentina and Uruguay are to arrive at ports late this month, which can replace PNW soybeans. Besides, China is still purchasing US soybeans. Hence, soybean supply will further increase at ports. In a hybrid of the bull and the bear, short-term soybean market is predicted to keep range-bound.
Cottonseed: Cottonseed prices fluctuate by 0.02-0.03 CNY/kg today. The supply of cottonseed is decreasing and tightening, so traders are reluctant to sell them. Besides, it is hard to reduce the freight from Xinjiang to inland due to lack of vehicles. In consequence, the price of Xinjiang cottonseed to inland is boosted to go up. But crushing mills reduce the operation rate and suffer from losses in crush margins. And there are not many new orders and the price falls slightly in several regions. Therefore, the price of gross cottonseed delivered from Xinjiang to inland factories will likely fluctuate to stay strong in a short term.
Oils:
Summary: After posting gains for consecutive sessions, U.S. soybean futures finished unchanged last Friday. On the Dalian Commodity Exchange today, soybean oil edges higher but actually stay around the previous close, and palm oil sees weak gains in nearby contracts and stronger in forward ones. In the spot markets, soybean oil declines by 10-30 CNY/tonne and palm oil down by 30-70 CNY/tonne. The trading is predicted to be tepid for spots, but relatively better on forward basis. Participants forecast that Malaysia’s May palm oil stocks will increase to 2.25-2.30 mln tonnes, compared to 2.05 mln tonnes in April. Besides, China’s soybean imports are expected to surpass a monthly average of 10 mln tonnes between June to August, which adds to concerns in the market. Hence, the oil market breaks its uptrend to swing to adjust today. However, weekly soybean crush declined by 7% to 1.92 mln tonnes last week as some oil mills suspended production due to swelling soybean meal inventories and temporary soybean shortages. Moreover, soybean oil market traded high at a total of 380,000 tonnes last week as buyer were active. Hence, soybean oil stocks only increase by 18,000 tonnes to 950,000 tonnes. Besides, Malaysia has announced a 100% exemption of export duties on palm oil from July to December this year, which will enhance its export competitiveness. And OPEC+ has agreed to a one-month extension of its record oil-production reduction, and U.S. crude oil is also strengthening recently. Meanwhile, there is still huge uncertainties in relations between China and the U.S.. These are all positive to the oil market. Overall, the oil market is predicted to have limited downside space and to keep a strengthening trend.
Soybean oil: GB Grade I soybean oil is mainly priced at 5740-5900 CNY/tonne in domestic coastal areas, mostly down 10-30 CNY/tonne. (Tianjin traders 5770; Rizhao traders 5730; Zhangjiagang traders 5850; and Guangzhou traders 5870-5900).
Palm oil: RBD palm olein is mainly priced at 5160-5270 CNY/tonne in coastal areas, down 30-70 CNY/tonne. (Tianjin traders 5260, down 30; Rizhao traders 5270-5280, down 70; Zhangjiagang traders 5230, down 40; Guangzhou traders 5160, down 40; and Xiamen not available).
Rapeseed oil: U.S. soybean futures closed unchanged last Friday, and rapeseed oil future swing to decline on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil goes down 20 CNY at 7450-7590 CNY/tonne in coastal regions in thin trading. 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. And rapeseed oil market has seen no deal for days as buyers are cautious, which is bearish to the market. However, tensions remain between China and Canada after Huawei’s Meng Wanzhou did not get released, so imports of rapeseed and rapeseed oil from Canada will still get restricted. And the overall oil market is also supported by uncertainty between China and the United States. In the short run, rapeseed oil market is is predicted to fluctuate at a high level. And its trading will still remain tepid due to its much higher prices than soybean oil and palm oil.
Cottonseed oil: Cottonseed oil prices mainly keep steady and increase by 50-100 CNY/tonne in some regions today. The operation rate among cottonseed crushing mills stays at low levels and cottonseed price continues moving higher, boosting cottonseed oil market. Although soybean oil on Dalian Commodity Exchange edges up today, it actually moves around closing price of the previous day. And palm oil on DCE goes weakly in nearby months but strongly in forward months. On the spot market, soybean oil down by 10-30 CNY/tonne and palm oil down by 30-70 CNY/tonne. Besides, seeing over 10 mln tonnes of soybean arrivals each month from June to August, it raises market concerns over the bad news and affects buyers’ 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)
