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China Soybean Weekly Report -- As of June 5, 2020

2020-06-09 www.cofeed.com
I. Soybean
 
Price
 
Domestic soybean: On the supply side, local farmers have little surplus in hand, and traders expect a reducing volume available for sales. And commercial soybeans are not in huge volume in northeastern regions, so the market is in a tight supply outlook. Hence, soybean prices keep firm now, which is bullish to domestic soybean market. But on the demand side, the market sees tepid demand and fair shipments. In addition, imported soybeans are at low prices at port, which is also weighing on domestic soybean market. In a hybrid of the bull and the bear, domestic market is predicted to keep firm in the near term. 
 
Imported soybean: PNW soybeans are highly concentrated in the hand of very few traders at ports, and there is much uncertainty in trade relations between China and the U.S., which together bolster PNW soybean prices to rebound slightly at ports. However, downstream customers tend to stay on the sideline and do not totally accept high prices, so that they have little enthusiasm in purchasing. In addition, Brazilian soybean stocks are high at domestic ports and are offered at mixed prices. Besides, soybean vessels from Argentina and Uruguay are about to arrive at ports, and China is still purchasing US soybeans. Hence, port soybean stocks will further increase. In the absence of bulk demand, imported soybean prices are predicted to have some downside potential.
 
 
 
 
 
Crush: Operation rates continue dropping this week (May 30-June 5), as some mills are facing swelling soybean meal inventories or temporary soybean shortages. Soybean crush at domestic mills totals 1,915,550 tonnes (meal 1,513,285 tonnes and oil 363,955 tonnes), down 150,550 tonnes or 7.28% from 20661000 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) are 55.17%, down 4.34% from 59.51% in the previous week. Soybean crush is predicted to snap off the decline to increase to 2.03 mln tonnes and 2.06 mln tonnes in the next two weeks, respectively.
 
As of this week, soybean crush nationwide totals 57,504,964 tonnes in the soybean crop year of 2019/20 (from October 1st, 2019), down 343,021 tonnes or 0.59% from 57,847,985 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 35,521,450 tonnes, up 824,865 tonnes or 2.37% from 34,696,585 tonnes of the corresponding period in 2019. 
 
 
Inventory: Soybean stocks continue rising in coastal regions this week as mills are busy unloading soybean cargoes. In the week as of June 5, imported soybean stocks in mills in domestic coastal regions total 4,814,100 tonnes, up 286,800 tonnes by 6.33% from 4,527,300 tonnes last week and up by 12.34% from 4,285,000 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 25 cargoes with 1.627 mln tonnes this week, a total of 20 cargoes with 1.276 mln tonnes for June 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, 8.1 mln tonnes for September and 6.8 mln tonnes for October. Statistics will be updated every week on account of fresh buying and renewed shipments.  
 
II. Soybean Meal
 
Price: Domestic soybean meal prices first fell and then climbed higher this week (June 1-5). As of this Friday, prices settles up 10-50 CNY at 2670-2800 CNY/tonne in domestic coastal regions. 
 
 
 
Inventory: Soybean meal stocks continue the uptrend for a seventh straight week this week as soybean crush still stays at a very high level. In the week ending June 5, soybean meal stocks in mills in domestic coastal regions are 665,800 tonnes, up 24,200 tonnes by 3.77% from 641,600 tonnes last week yet down 9.55% from 736,100 tonnes of the corresponding period last year. Soybean meal stocks will likely continue increasing, as weekly soybean crush is forecast to stay high at around 2 mln tonnes in the next two weeks.
 
 
III. Soybean Oil
 
Price: Domestic soybean oil prices bounce for a second consecutive week this week (June 1-5). As of this Friday, the price for GB Grade I settles at 5740-5930 CNY/tonne in domestic coastal regions, an increase of 30-130 CNY/tonne from last week. 
 
 
 
Inventory: Soybean oil stocks continue a slight rise this week. In the week ending June 5, China’s soybean oil commercial inventory has totaled 949,470 tonnes, up 17,820 tonnes by 1.91% from 931,650 tonnes last week, up 124,470 tonnes by 15.09% from 825,000 tonnes last month, yet down 479,330 tonnes by 33.55% from 1,428,800 tonnes of the corresponding period last year. And the five-year average at the same period is 1,154,100 tonnes.