Today (Dec 31), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: U.S. Gulf soybean is offered at 5,000 CNY/tonne at Shandong ports today. Some traders are unwilling to sell under tight supply at port now, and the cost import remains high due to a strong trend in U.S. soybean prices, which together bolster imported soybean prices at port to keep strengthening. However, commodity inspections are relax at ports now, and imports of U.S. soybeans are huge, so it is very likely that imported soybean supply will get increasing in China. In the short term, imported soybean market may keep strengthening on bullish factors.

Cottonseed: Cottonseed prices increase by 0.02-0.05 CNY/kg in some regions of China today. Cottonseed output this year is lower than the previous year. And with ginning factories in North Xinjiang idled successively, cottonseed availability is gradually decreasing. Moreover, traders who have stocks in hand look bullish on after-market, supporting cottonseed market. However, the delivery of cottonseed is still under impact of the COVID-19 outbreak in Xinjiang. Furthermore, cottonseed crushing mills keep facing losses as cottonseed price remains too high, and the overall cottonseed market is in subdued trade, which may curb its price rises. It is expected that short-term cottonseed price will fluctuate to stay strong.

Oils: 

Summary: U.S. soybean futures broke the 1,300 cents level to hit a six-and-a-half-year high on Wednesday on strong U.S. soybean exports and on concerns over dry weather in South America, albeit a deal to have resolved strikes in Argentina. And on China’s Dalian Commodity Exchange today, soybean oil futures further advance but have notably narrowed down gains, while palm olein fluctuates to decline. In the spot markets, soybean oil prices are stable mostly, but palm oil for the most part goes down 40 CNY/tonne, both in lukewarm trade.

Sharp rises in U.S. soybean futures are pushing up meal prices in China, so domestic oils market is under pressure as traders are unwinding long oils and short meals. However, the market forecasts Malaysian palm oil exports will expand the month-over-month growth to around 19% in December, which bolsters the market sentiment. Moreover, soybean oil stockpiles are thus expected to go below 1 mln tonnes in the near term, and spot supplies are tightening in southern China. And domestic rapeseed oil stockpiles are also low. The overall oils market is predicted to stay high with a strengthening trend ahead of the Chinese Lunar New Year. But the oils market has been in thin trade since prices rose to high levels this month, which may add to fluctuations in the market. Participants need to pay attention to risks of short-term fluctuations.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,640-8,840 CNY/tonne in domestic coastal areas. (Tianjin traders 8640; Rizhao traders 8680-8700; Zhangjiagang traders not available; and Guangzhou traders 8840). 

Palm oil: RBD palm olein is mainly priced at 7,220-7,320 CNY/tonne in coastal areas, mostly down 40 CNY/tonne. (Tianjin traders 7320, down 40; Rizhao traders 7310; Zhangjiagang traders 7220, down 40; Guangzhou traders 7240-7250, down 40; and Xiamen not available).

Rapeseed oil: U.S. soybean futures closed further higher on Wednesday on strong U.S. exports and as continued dry weather in South America could affect the supply. Rapeseed oil futures fluctuate to rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 10-30 CNY at 10,130-10,210 CNY/tonne in coastal regions in tepid trading.   

China’s rapeseed oil stockpiles have fallen to 142,000 tonnes under low rapeseed crush, and soybean oil stocks have also further declined to around 1 mln tonnes. Meanwhile, December production and exports bode well for a continued decline in Malaysian palm oil inventories. The overall oils market is not bearing supply pressure, which is buoying rapeseed oil market. But the consumption of rapeseed oil is smaller under its big price spread with soybean oil and palm oil. Overall, rapeseed oil market is predicted to stay at the high level, but mainly with rigid demand in the market.

Cottonseed oil: Cottonseed oil prices keep steady with a partial increase of 50 CNY/tonne in China today. Chicago soybean prices skyrocketed to over 1,300 cents in overnight trading on strong export of US soybeans and prolonged dry conditions across crop area in South America, refreshing a six-and-a-half-year high. Soybean oil stages further gains but obviously narrows its rises on China’s Dalian Commodity Exchange today. Malaysia’s palm oil exports during December represent an increase of more than 19% compared to last month, shoring up market sentiment. Besides, soybean oil stocks will undoubtedly fall to below 1 mln tonnes. In this case, the supply of spot soyoil in South China is tightening. Also, rapeseed oil stockpiles are at low levels. Hence, the overall oils market will maintain an uptrend before the Lunar New Year. Moreover, cottonseed oil millers are facing sustained loss, so that they have certain sentiment in lifting prices. Therefore, it is predicted that short-term cottonseed oil market will stay strong at the high level on the whole.

Sunflower oil: Sunflower oil prices are stable in China today. Grade I imported sunflower oil is offered at 10,100-10,800 CNY/tonne; crude sunoil is offered at 9,700-9,900 CNY/tonne.

Sharp rises in U.S. soybean futures are pushing meal prices higher in China, so domestic oils market is under pressure as traders are unwinding long oils and short meals. Downstream buyers are cautious in sunflower oil market due to high prices and tend to buy on immediate demand, so the market has been in lukewarm trade. And some buyers also choose corn oil as a substitute, so some sunflower oil millers have weaker sentiment in supporting prices, which is also bearish to the market. However, soybean oil stockpiles are thus expected to go below 1 mln tonnes in the near term, and spot supplies are tightening in southern China. And domestic rapeseed oil stockpiles are also at a low level. In addition, sunflower oil prices also stay at high levels in Ukraine, which is lifting the import cost. These are bullish to domestic sunflower oil market. On the whole, sunflower oil prices will likely fluctuate in the near term.

Corn oil: Corn oil prices are stable in China today. Grade I corn oil is offered at 10,000-10,300 CNY/tonne. (Shandong 10,200-10,300 CNY/tonne; Hebei 10,200; Liaoning 10,000; Sichuan 10,000); crude corn oil is offered at 8,450-8,700 CNY/tonne. (Hebei 8,450-8,600 CNY/tonne; Henan 8,500; Inner Mongolia 8,700).

Some mills in Shandong Province are still limiting the production, and swollen soybean meal inventory has also led to a decline in soybean crush, coupled with the start of the peak season for stocking up packaging oils, so millers still have sentiment to hike prices. However, spot corn oil prices remain high at present, and most millers tend to wait on the sidelines, which is adding bearish sentiment to the market. Overall, corn oil market is predicted to keep strengthening.

(USD $1=CNY ¥6.52)