Today (Aug 28), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: The reference price is 3,910-4,000 CNY for Uruguayan soybeans and 3,730-3,770 CNY/tonne for Argentine soybeans at Shandong ports today. Soybean shipments are at a slow pace as buyers are not active when there is not much demand. Moreover, the trading prices in the auctions are lower than spot market prices, which is also adding to bearish sentiment to the market. However, soybean volume in circulation are limited at Shandong ports, and some soybean vessels are still waiting to go through customs, which lend some support to the market. Dominated by such bearish factors, imported soybean market is predicted to go weakening.

Cottonseed: Cottonseed prices are stable today. Many places in Xinjiang have been locked down amid the COVID-19 pandemic, so the delivery of cottonseed is still under impact. And 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, so the cottonseed market is supported temporarily. Therefore, short-term cottonseed market is likely to maintain high levels. After new cottonseed intensively enters market, the price will probably fall back from highs.

Oils: 

Summary: U.S. soybean futures surged on Thursday, as the dryness in the Midwest could still be a threat to soybean yield, China still had strong demand for U.S. soybeans, and Brazil decided to remove temporarily import tariffs on soybeans as a move to fight the inflation. And oils futures also move sharply higher on China’s Dalian Commodity Exchange today due to fund buying. In the spot markets, soybean oil goes up 100-150 CNY/tonne and palm oil up 60-120 CNY/tonne. Buyers are cautious on high prices, so there is tepid trade for spots and may be some purchases at low-level forward basis.

Domestic oils market continues going up today. The cost of importing U.S. soybeans has been lifted. And Indonesia plans to implement the mandatory use of biodiesel containing 40% palm oil in July 2021. Besides, Malaysia’s palm oil August 1-25 output has dropped 1.3% from the previous month, which could make August production flat with that in July. Meanwhile, declines in palm oil exports in this country have been narrowing down. These could together reduce slightly the pressure of a higher month-ending stockpiles outlook in Malaysia. However, Chinese crushers are still operating at very high rates due to huge soybean imports, time is getting closer for U.S. soybeans to go marketing en base, and buyers will complete stocking up packaging oils in late September. Hence, there are still uncertain factors in the market, so buyers are suggested to keep light stockpiles.

Soybean oil: GB Grade I soybean oil is mainly priced at 6,840-6,900 CNY/tonne in domestic coastal areas, a rise of 100-150 CNY/tonne. (Tianjin traders 6840-6850; Rizhao traders 6770; Zhangjiagang traders 6900; and Guangzhou traders 6900). 

Palm oil: RBD palm olein is mainly priced at 6,160-6,280 CNY/tonne in coastal areas, mostly up 60-120 CNY/tonne. (Tianjin traders 6230-6260, up 60; Rizhao 6280, up 110; Zhangjiagang traders 6160, up 110; Guangzhou traders 6210-6230, up 120; and Xiamen not available). 

Rapeseed oil: U.S. soybean futures closed sharply higher on Thursday, lifting the cost of soybean imports for Chinese buyers. And Indonesia plans to implement the mandatory use of biodiesel containing 40% palm oil in July 2021, which is also bullish to the oils market in China. Hence, Dalian palm olein futures lead all domestic oils higher today. Spot rapeseed oil prices are offered higher by 80-150 CNY at 9,060-9,230 CNY/tonne in coastal regions in tepid trading. China’s rapeseed imports are limited amid tensions between Beijing and Ottawa. As rapeseed crush remains at a low level, crushing plants are mainly carrying out contracts at present and rapeseed oil stocks are only 210,000 tonnes in coastal regions. These are supporting rapeseed oil prices. However, China’s soybean stocks amount to 6.36 mln tonnes in coastal regions due to huge imports, an increase of 18% from a year earlier. And soybean oil stocks also rose 3% weekly to 1.26 mln tonnes, as the crush remained at a high level. Besides, new U.S. soybeans will go market in huge quantities soon, and domestic consumption of rapeseed oil is small due to its widening price spread with soybean oil and palm oil. Overall, rapeseed oil market is predicted to stay high due to tight supplies and to stay in thin trade.

Cottonseed oil: Cottonseed oil prices stay stable today. China’s brisk demand, market’s concerns about yield reduction at harvest affected by hot and dry conditions across the Midwest, coupled with Brazil’s scrapping tariffs from importing soybean against inflation led U.S. soybean futures to surge on Thursday. Also, oil futures on China’s Dalian Commodity Exchange (DCE) are significantly higher today. In the spot market, soybean oil jumps by 100-150 CNY/tonne and palm oil up by 60-120 CNY/tonne. Additionally, manufacturers have no pressure on inventory as cottonseed is pricey, bolstering cottonseed oil market. But soybean crush remains super high amid huge imports, thereby soybean oil stocks are increasing. And the stockpiling of packing oil will be over in mid-to-late September, bearing oils market. Moreover, cottonseed oil trading is tepid due to slack demand, which may limit its price rises. It is predicted that short-term cottonseed oil market may move fluctuate at high levels.

(USD $1=CNY ¥6.89)