China Soybean Weekly Report--As of June 19, 2020

2020-06-23 www.cofeed.com

I. Soybean

Price

Domestic soybean: Domestic soybean supply posts a tight prospect in producing regions, as it will take nearly 4 months for most new crops to go marketing. However, downstream buyers are not vigorous at current high prices. And new early soybeans in Hunan and Hubei will go into the market soon. Hence, soybean supply may get an increase. Dominated by bullish factors, domestic soybean market is predicted to maintain a strengthening trend next week.

Imported soybean: The prices were not available for days at Shandong ports due to the inspection by commodity authorities, and the prices remained stable after the inspection. PNW soybeans are highly concentrated in the hand of very few traders at ports, which bolsters PNW soybean prices to keep firm. However, soybean stocks total 170,000 tonnes at Shandong ports now, and some 90,000 tonnes are expected to arrive later this month or earlier July, which can be a substitute for PNW soybeans. In addition, China is purchasing U.S. soybeans, at a pace of at least 2 cargoes every day this week. On the demand front, buyers are not vigorous and tend to wait, and there is only the rigid demand in the market, which also slows down port shipments. In a hybrid of the bull and the bear, imported soybean market is predicted to trade at a narrow range.

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Crush: With huge soybean arrivals and on concerns over the storage in the scorching summer, oil mills are seeking to maintain high operation rates, which hit a weekly new high this week (June 13-19). Soybean crush at domestic mills totals 2,138,200 tonnes (meal 1,689,178 tonnes and oil 406,258 tonnes), up 86,200 tonnes or 4.20% from 2,052,000 tonnes in the previous week. Meanwhile, operation rates (capacity utilization) are 61.58%, up 2.48% from 59.10% in the previous week. Soybean crush is predicted to continue the uptrend to 2.15 mln tonnes and 2.17 mln tonnes in the next two weeks, respectively.

As of this week, soybean crush nationwide totals 61,711,164 tonnes in the soybean crop year of 2019/20 (from October 1st, 2019), up 344,579 tonnes or 0.56% from 61,366,585 tonnes of the same period last year. In calendar year of 2020 (from Jan. 1st, 2020), national soybean crush amounts to 39,727,650 tonnes, up 1,512,465 tonnes or 3.95% from 38,215,185 tonnes of the corresponding period in 2019.

Inventory: Soybean stocks continue the growth in coastal regions this week as mills are busy unloading soybean cargoes due to huge imports, but the growth is narrowing down as soybean crush has again hit a new high. In the week as of June 19, imported soybean stocks in mills in domestic coastal regions total 5,183,500 tonnes, up 97,500 tonnes by 1.92% from 5,086,000 tonnes last week and up by 15.69% from 4,480,200 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 31 cargoes with 1.988 mln tonnes this week, a total of 96 cargoes with 7.9112 mln tonnes for June so far. The import is predicted to be 159 cargoes or 10.441 mln tonnes for June, 10.4 mln tonnes for July, 9.2 mln tonnes for August, 8.1 mln tonnes for September and 7.2 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 further decline this week (June 15-19). As of this Friday, prices settles down 10-30 CNY at 2630-2740 CNY/tonne in domestic coastal regions.

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Inventory: Soybean meal stocks continue the uptrend for a ninth straight week this week as soybean crush still stays at a very high level. In the week ending June 19, soybean meal stocks in mills in domestic coastal regions are 900,300 tonnes, up 149,400 tonnes by 19.90% from 750,900 tonnes last week and up by 5.56% from 852,800 tonnes of the corresponding period last year. Soybean meal stocks will likely continue increasing, as weekly soybean crush is forecast to stay high around 2.15 mln tonnes in the next two weeks.

III. Soybean Oil

Price: Domestic soybean oil prices significantly rebound this week (June 15-19). As of this Friday, the price for GB Grade I settles at 5800-6000 CNY/tonne in domestic coastal regions, an increase of 100-180 CNY/tonne from last week.

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Inventory: Soybean oil stocks continue the growth this week. In the week ending June 19, China’s soybean oil commercial inventory has totaled 1,037,550 tonnes, up 81,350 tonnes by 8.51% from 956,200 tonnes last week, up 162,550 tonnes by 18.58% from 875,000 tonnes last month, yet down 436,850 tonnes by 29.63% from 1,474,400 tonnes of the corresponding period last year. And the five-year average at the same period is 1,220,700 tonnes.

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