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Daily Review on Markets for Oilseeds and Oils in China--8/7/2020

2020-08-07 www.cofeed.com

Today (Aug 7), the market for oilseeds and oils in China is shown as follows:

 

Oilseeds:

 

Imported soybean: The reference price is 3,600 CNY for Brazilian soybeans and 3,790-3,850 CNY/tonne for Argentine soybeans at Shandong ports, and 4,950 CNY/tonne for non-GM Ukrainian soybeans at Tianjin port. Port traders are slow in clearing shipments as it is in the seasonally weak demand for soybeans. In addition, soybean vessels are reaching ports gradually. These factors are cracking down on traders’ confidence. However, the supply of imported soybeans is relatively limited at Shandong ports, as traders there are controlling the quantity in circulation. In a hybrid of the bull and the bear, imported soybean market is predicted to steady with a weakening trend in the short run.

 

Cottonseed: Cottonseed prices today mostly remain stable, and some local seed increases by 0.06 CNY/kg. Cottonseed is in short supply as a whole. Besides, many places in Xinjiang have been locked down due to the COVID-19 outbreak, so it is lack of vehicles from Xinjiang to inland, increasing the transport cost. These are supporting cottonseed market. But the operation rate in cottonseed crushing mills is relatively low and the trading in market is light, dragging down cottonseed market. Overall, cottonseed market will keep strengthening on account of cottonseed shortages. After new cottonseed intensively enters market, the price will probably fall back from high levels.

 

Oils: 

 

Summary: U.S. soybean futures continue to decline on Thursday, and oil futures swing to adjust on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil partially fluctuates by 10-30 CNY/tonne and palm oil goes down 30-40 CNY/tonne. The trading is predicted to be good on low-level basis, but tepid for spots. The cost of importing soybeans has declined due to stronger CNY, and domestic crushers have been running at very high operation rates. Oils futures have weak upward impetus and stay in the correction territory now as funds have higher risk aversion in the wake of sharp rises. However, palm oil output in Malaysia for August 1-5 was down 14% on the previous month, said the Southern Peninsular Palm Oil Millers Association, which has again spurred concerns over a reduction in August production. And China’s commercial soybean oil inventories are only 1.25 mln tonnes at present, while its amount in outstanding contracts has set a fresh high of 2.42 mln tonnes. Domestic palm oil and rapeseed oil stockpiles also remain low. Besides, there are still concerns over an inflation expectation and tensions between China and the United States. Overall, the oils market is predicted to keep a strengthening trend.

 

Soybean oil: GB Grade I soybean oil is mainly priced at 6,440-6,570 CNY/tonne in domestic coastal areas, fluctuating by 10-30 CNY/tonne. (Tianjin traders 6440; Rizhao traders 6520; Zhangjiagang traders 6570; and Guangzhou traders 6550). 

 

Palm oil: RBD palm olein is mainly priced at 6,080-6,200 CNY/tonne in coastal areas, mostly down 30-40 CNY/tonne. (Tianjin traders 6080, down 30; Rizhao 6200, down 40; Zhangjiagang traders 6130, down 40; Guangzhou traders 6170, down 30; and Xiamen not available). 

 

Rapeseed oil: U.S. soybean futures extend losses on Thursday, but rapeseed oil futures continue rising on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices are offered higher by 20-40 CNY at 9,320-9,390 CNY/tonne in coastal regions in tepid trading. China’s rapeseed crush stays at a low level, as its rapeseed imports are limited amid tensions with Canada. Currently, rapeseed oil stocks are only 218,000 tonnes in domestic coastal regions, and domestic oil mills are mainly carrying out contracts. Compared to the corresponding period in previous years, domestic palm oil stockpiles are also the lowest. Funds are still speculating under US-China tensions and inflation expectations. Hence, rapeseed oil prices keep firm at high levels. However, China’s soybean crush is predicted to stay high at 2.08 mln tonnes this week and 2.12 mln tonnes next week due to adequate soybean supplies. Buyers are cautious in rapeseed oil market now as its price is much higher than soybean oil and palm oil. Overall, rapeseed oil prices will still stay high due to tight supplies, and there will be mainly rigid demand in the market.

 

Cottonseed oil: Cottonseed oil prices stay firmly today, and the wholesale price of it grows by 200 CNY/tonne in individual regions. Cottonseed price is too high and manufacturers have no pressure from inventory, which underpins cottonseed oil market. U.S. soybean futures dropped further on Thursday. And oil futures on Dalian Commodity Exchange moved sideways today. In the spot market, palm oil down by 30-40 CNY/tonne. In this case, cottonseed oil market is dragged down by these factors. On the other side, SPPOMA said that Malaysian palm oil production from Aug 1st to Aug 5th declined 14% month on month, triggering market’s fears about an output cut in palm oil in August. Besides, soybean crush in China rose by 5.4% to 2.06 mln tonnes last week. And the business inventory of soybean oil only sets around 1.25 mln tonne at the moment. However, the unfulfilled contract of soybean oil has hit a fresh record of 2.42 mln tonnes. Also, the inventory of rapeseed oil and palm oil still stays at a historical low. Due to aforementioned things and under the context of inflation expectations and souring ties between U.S. and China, cottonseed oil market is predicted to follow bulk oils market to maintain a strong trend as a whole.

 

(USD $1=CNY ¥6.94)