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Daily Review on Markets for Oilseeds and Oils in China--11/26/2020

2020-11-26 www.cofeed.com

Today (Nov 26), the market for oilseeds and oils in China is shown as follows:

 

Oilseeds:

 

Imported soybean: U.S. Gulf soybeans are offered at 4,850-4,900 CNY/tonne and Uruguayan soybeans at 4,900-4,950 CNY/tonne at Shandong port today. Domestic purchasers tend to choose domestic soybeans and have little appetite for imported soybeans. And U.S. democratic candidate Joe Biden won the presidential election, which will make for a detente in relations between China and the US. In addition, China is still purchasing soybeans from the U.S. and Brazil, which will increase the arrivals at ports and thus be negative to imported soybean market. However, imported soybeans are in tight supplies, in addition to strict commodity inspections at ports, which is bolstering the market. Overall, short-term imported soybean market is predicted to steady.

 

Cottonseed: Cottonseed prices rise by 0.02 CNY/kg in several regions today. The delivery of cottonseed is still under impact of the COVID-19 outbreak in Xinjiang. Moreover, cottonseed crushing mills keep facing losses as cottonseed price remains too high, and some mills have halted the purchase and have intention to force price down. Besides, cottonseed output this year is lower than the previous year and cottonseed oil stays firm, which supports cottonseed market. It is expected that cottonseed price will fluctuate narrowly in a short term and keep strengthening on the whole.

 

Oils: 

 

Summary: U.S. soybean futures slipped on Wednesday, pressured by the weather forecast for beneficial rainfalls in Argentina and as Chinese importers canceled several U.S. soybean cargoes for Dec to Jan shipment due to sinking crush margins. Oils futures fluctuate to adjust on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil go down 20-30 CNY/tonne, both in tepid trade.

 

Malaysian Nov 1-25 palm oil exports fell 19% month over month, but concerns over lower demand is offsetting by an tight outlook in oils supply and a strong crude oil price trend. Import margins for soybean oil and palm oil have been notably worsening, so that there come whispers from time to time that Chinese buyers have canceled cargoes. Meanwhile, China’s commercial soybean oil stocks have declined for a sixth straight week, and palm oil and rapeseed oil inventories are also low, whilst the peak consumption of oils is approaching. Hence, fundamentals remain bullish in the oils market. Besides, news on coronavirus vaccines keeps coming into the market, in addition to a global inflation expectation. Overall, the oils market is predicted to have small downside space and to keep an uptrend in fluctuation.

 

Soybean oil: GB Grade I soybean oil is mainly priced at 8,140-8,190 CNY/tonne in domestic coastal areas, partially down 20 CNY/tonne. (Tianjin traders 8150; Rizhao traders 8180; Zhangjiagang traders 8190; and Guangzhou traders 8140-8160). 

 

Palm oil: RBD palm olein is mainly priced at 6,780-6,850 CNY/tonne in coastal areas, mostly down 20-30 CNY/tonne. (Tianjin traders 6850, down 30; Rizhao not available; Zhangjiagang traders 6800, down 30; Guangzhou traders 6780, down 20; and Xiamen not available).

 

Rapeseed oil: U.S. soybean futures closed lower on Wednesday, and rapeseed oil futures also stay below the previous close in spite of gains on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices go down 40-70 CNY to 10,190-10,320 CNY/tonne in coastal regions in tepid trading.

 

With a flurry of soybean vessels arriving at domestic ports, China’s soybean crush remains at an extremely high level of 2 mln tonnes weekly. Moreover, the consumption of rapeseed oil is also affected by its huge price spread with soybean oil and palm oil. These are dragging down rapeseed oil market to follow futures to decline. However, China’s rapeseed oil stocks are only 199,000 tonnes and soybean oil and palm oil inventories are also low, while there is stronger demand from feed production; hence, the oils market is not bearing supply pressure. This will support rapeseed oil prices to stay at the high level.

 

Cottonseed oil: Cottonseed oil prices keep steady and drop by 100 CNY/tonne in individual regions today. The rainfall in Argentina had improved, and some Chinese importers cancelled US soybean contracts for shipment in Dec-Jan on account of declining crush margins. Consequently, U.S. soybean futures pared gains on Wednesday. Oil futures fluctuate on China’s Dalian Commodity Exchange today, with soybean oil and palm oil falling by 20-30 CNY/tonne in the spot market. Malaysia’s palm oil exports for November 1st-25th drop by 19% compared to the previous month. Accordingly, bulk oils market falls back in the near term, which may weighed on cottonseed oil market. However, expected tight oils supply and the strength on crude oil offset worries about lower demand. With the forthcoming peak season for consumption, oils fundamentals will remain bullish against the backdrop of global inflation expectations. In addition, cottonseed crushing mills keep facing losses as cottonseed is still pricey, so they intend to prop up prices. It is predicted that cottonseed oil market will not drop too much and stay strong on the whole.

 

Sunflower oil: Sunflower oil prices steady with a partial rise in China today. Grade I imported sunflower oil is offered at 10,200-10,650 CNY/tonne; crude sunoil is offered at 9,700-10,000 CNY/tonne.

 

Concerns over lower demand is offsetting by an tight oils supplies outlook and a strong crude oil price trend. Besides, import margins for soybean oil and palm oil have been notably worsening, so that there come whispers from time to time that Chinese buyers have canceled cargoes. Meanwhile, China’s commercial soybean oil stocks have declined for a sixth straight week, and palm oil and rapeseed oil inventories are also low, whilst the peak consumption of oils is approaching. Hence, fundamentals remain bullish in the oils market. Moreover, sunflower oil prices are at high levels in foreign countries, and a reduction in sunflowerseed production is also lifting prices. Therefore, domestic millers have strong sentiment in propping up sunflower oil prices. Overall, sunflower oil market in China is expected to continue an strengthening trend.

 

Corn oil: Corn oil prices steady with a partial rise in China today. Grade I corn oil is offered at 10,000-10,500 CNY/tonne. (Shandong 10,200-10,500 CNY/tonne; Hebei 10,200; Liaoning 10,000; Sichuan 10,200, up 100 CNY); crude corn oil is offered at 8,500-8,600 CNY/tonne. (Hebei 8,350-8,600 CNY/tonne; Henan 8,500; Inner Mongolia 8,300).

 

Chinese millers have stronger sentiment in propping up corn oil prices as corn germ prices stay at a high level in the market at present. Moreover, the demand for oils in feed production this year also see a huge rise, which is also driving corn oil market. But spot corn oil stays at high prices. And its supplies are increasing due to a pickup in operation rates, whilst downstream buyers have little appetite under dismal demand. These are pressuring the market. Overall, corn oil market is predicted to keep firm in the short run.

 

(USD $1=CNY ¥6.58)