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China Soybean Weekly Report -- As of June 12, 2020

2020-06-16 www.cofeed.com

I. Soybean

 

Price

 

Domestic soybean: Domestic soybean supply posts a tight prospect in producing regions, which shore up traders’ confidence in selling. Besides, participants expect that the quantity of old soybeans into the market will be limited, and most traders are betting a shortage in supply. Hence, there is a strong bullish sentiment in the market. In the context of a tight supply, domestic market is predicted to have upward impetus in the near term. However, soybean imports from Russia will be resumed at Dongning Port on June 13th, which will add to the supply in northern China, so participants can keep an eye on that.

 

Imported soybean: PNW soybeans are highly concentrated in the hand of very few traders at ports, which bolsters PNW soybean prices to keep firm. However, port Brazilian soybeans are of high stocks and relatively weakening spot prices. And soybean vessels from Argentina and Uruguay are to arrive at ports later this month, which can replace PNW soybeans. In addition, China is still purchasing US soybeans. Hence, port soybean stocks will further increase. Meanwhile, downstream customers now lack of enthusiasm and stay on the sidelines, so that there is only rigid demand in the market and port shipments are not at a quick pace. In a hybrid of the bull and the bear, imported soybean prices are predicted to trade at a narrow range. Participants can focus on soybean arrivals at domestic ports and the market demand.

 

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Crush: Along with a rally in operation rates this week (June 6-12), soybean crush at domestic mills totals 2,052,000 tonnes (meal 1,621,080 tonnes and oil 389,880 tonnes), up 136,450 tonnes or 7.12% from 1,915,550 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) are 59.10%, up 3.93% from 55.17% in the previous week. Soybean crush is predicted to continue the uptrend to a record high of 2.13 mln tonnes and 2.15 mln tonnes in the next two weeks, respectively.

 

As of this week, soybean crush nationwide totals 59,572,964 tonnes in the soybean crop year of 2019/20 (from October 1st, 2019), down 1,221 tonnes from 59,574,185 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 36,737,750 tonnes, up 314,965 tonnes or 0.08% from 36,422,785 tonnes of the corresponding period in 2019.

 

 

Inventory: Soybean stocks continue the growth in coastal regions this week in spite of high crushing volume, as mills are busy unloading soybean cargoes due to huge imports. In the week as of June 12, imported soybean stocks in mills in domestic coastal regions total 5,086,000 tonnes, up 271,900 tonnes by 5.65% from 4,814,100 tonnes last week and up by 19.27% from 4,264,100 tonnes of the same period last year. Soybean stocks will gradually build up along with huge soybean arrivals between June and August.

 

 

Arrivals and the outlook: According to Cofeed, soybean arrivals are 40 cargoes with 2.627 mln tonnes this week, a total of 61 cargoes with 3.969 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, 9.2 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 trade in a narrow range to decline this week (June 8-12). As of this Friday, prices settles down 20-80 CNY at 2630-2760 CNY/tonne in domestic coastal regions. 

 

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Inventory: Soybean meal stocks continue the uptrend for an eighth straight week this week as soybean crush still stays at a very high level. In the week ending June 12, soybean meal stocks in mills in domestic coastal regions are 750,900 tonnes, up 85,100 tonnes by 12.78% from 665,800 tonnes last week yet down 1.19% from 760,000 tonnes of the corresponding period last year. Soybean meal stocks will likely continue increasing, as weekly soybean crush is forecast to stay high over 2.1 mln tonnes in the next two weeks.

 

 

III. Soybean Oil

 

Price: Domestic soybean oil prices bounce for a second consecutive week this week (June 8-12). 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. 

 

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Inventory: Soybean oil stocks continue a slight rise this week. In the week ending June 12, China’s soybean oil commercial inventory has totaled 956,200 tonnes, up 6,730 tonnes by 0.71% from 949,470 tonnes last week, up 103,200 tonnes by 12.1% from 853,000 tonnes last month, yet down 491,800 tonnes by 33.96% from 1,448,000 tonnes of the corresponding period last year. And the five-year average at the same period is 1,165,800 tonnes.