Today (Aug 12), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: The reference price is 3,620 CNY for Brazilian soybeans and 3,750-3,790 CNY/tonne for Argentine soybeans at Shandong ports, and 4,800 CNY/tonne for non-GM Ukrainian soybeans at Tianjin port. Port soybeans are in dismal trade in China during the seasonally slack demand, so that shipments are also at a slow pace. And soybean vessels are reaching domestic ports gradually. Both are undermining traders’ confidence. However, the supply of imported soybeans is relatively limited at Shandong ports now that traders there are controlling the quantity in circulation, which may reduce the price declines. 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 decline by 0.03-0.04 CNY/kg. Bulk oils pare gains today and it is rainy in many places, so the trading in cotton by-products gets worse. Moreover, cottonseed oil mills are not active in buying cottonseed due to a high price, which weighs on cottonseed market. But 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. As oils and meals prices fall back, cottonseed market also moves back. And the prices declines will be limited in a short term 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 rose on Tuesday on purchases of China. The market confidence in betting on a production reduction was subdued with the release of Malaysia’s July output at 1.81 mln tonnes, and the country’s exports fell 4.8% to 6.2% in the first 10 days of August versus July 1-10, so palm oil futures posted noticeable losses in late trade on the Bursa Malaysia Derivatives Exchange Tuesday. And oils futures also continue the downtrend on the Dalian Commodity Exchange today. In the spot markets, soybean oil goes down 10-100 CNY/tonne and palm oil down 120-130 CNY/tonne. The speculation on crop weather in the U.S. Midwest is less likely owing to good crop conditions, and the market is expecting a sharp increase in soybean yield in the USDA August report on Wednesday, which are cracking down on the bull sentiment. Hence, domestic oils prices continue to decline today. But domestic soybean oil inventory are growing slowing even under high soybean crush, while the amount in outstanding contracts has surged 6% weekly to 2.553 mln tonnes. Meanwhile, mid-to-downstream buyers are stocking up packaging oils. And domestic palm oil and rapeseed oil stockpiles are low compared to this period in previous years. Besides, there are still concerns over tensions between China and the United States. Overall market sentiment is still supported by bullish factors. If the USDA report is bearish as expected, short-term oils market will continue to fluctuate and adjust, and buyers can wait for the moment.

Soybean oil: GB Grade I soybean oil is mainly priced at 6,320-6,420 CNY/tonne in domestic coastal areas, down 10-100 CNY/tonne. (Tianjin traders 6320; Rizhao traders 6370; Zhangjiagang traders 6390; and Guangzhou traders 6400-6420). 

Palm oil: RBD palm olein is mainly priced at 5,850-5,870 CNY/tonne in coastal areas, mostly down 120-130 CNY/tonne. (Tianjin traders 5850-5860, down 130; Rizhao not available; Zhangjiagang traders 5870, down 120; Guangzhou traders 5890-5920, down 130; and Xiamen not available). 

Rapeseed oil: U.S. soybean futures closed higher on Tuesday, but Malaysian palm oil traded sharply lower, so palm olein futures lead a decline in Chinese oils markets today. Spot rapeseed oil prices are offered lower by 50-60 CNY at 8,950-9,020 CNY/tonne in coastal regions in tepid trading. Huge soybean arrivals at ports and high soybean crush are still potentially bearish factors to domestic market. For the USDA August Supply/Demand and World Production report on Wednesday, the market is expecting a sharp increase in soybean yield owing to good crop conditions. And domestic consumption of rapeseed oil is small because of its widening price spread with soybean oil and palm oil. In addition, China boosts rapeseed oil imports from Europe and the UAE, with some of that oil made from Canadian canola, according to a media report. Hence, domestic rapeseed oil prices drop from the high level. But rapeseed inventories and rapeseed crush are both low compared to this period in record, and rapeseed oil stockpiles are also low at present, so that oil millers are mainly carrying out contracts. If the USDA raises its soybean yield estimates as expected in the report on Wednesday, short-term spot rapeseed oil prices will likely follow futures to decline and adjust. Buyers can temporarily stay on the sidelines.

Cottonseed oil: Cottonseed oil prices stay firmly today. Cottonseed price is too high and manufacturers have no pressure from inventory, which briefly bolster cottonseed oil price. However, U.S. soybean expects a bumper harvest, further straining on global supply. Moreover, soybean arrival is huge in quantity in August and September. Besides, Malaysian palm oil production in July was 1.81 mln tonnes, dampening market’s confidence in output cut. In the first ten days of August, palm oil export fell by 4.8% to 6.2% month-on-month. Consequently, it saw a drastic late-day drop on Bursa Malaysia Derivatives (BMD) on Tuesday. And oil futures on Dalian Commodity Exchange (DCE) further declined today. In spot market, soybean oil down by 10-100 CNY/tonne and palm oil down by 120-130 CNY/tonne. Accordingly, cottonseed oil market is weighed down by these factors. It is predicted that short-term cottonseed oil market may move back with fluctuations.

(USD $1=CNY ¥6.96)