Today (Dec 11), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: U.S. Gulf soybeans are offered lower by 20 CNY at 4,600-4,750 CNY/tonne at Shandong ports today. The volume of U.S. soybeans arriving at China’s ports have been enormous, and domestic market is in increasing supplies due to easing commodity inspection at ports. But domestic purchasers tend to choose domestic soybeans and have little appetite for imported soybeans. In addition, China is buying up on U.S. and Brazilian soybeans, which may further add to the arrivals at ports. These are all bearish to imported soybean prices in China. Overall, short-term imported soybean market is predicted to steady with a weakening trend.

Cottonseed: Cottonseed prices fluctuate by 0.01-0.04 CNY/kg in China 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 in Shandong have suspended operation due to environmental warning. Hence, they have strong intention to force price down. But cottonseed output this year is lower than the previous year and cottonseed oil prices stay firm, which supports cottonseed market. It is expected that cottonseed price will fluctuate narrowly in a short term.

Oils: 

Summary: U.S. soybean futures closed lower on Thursday, as the cuts in soybean stocks by the USDA report were smaller than the market expectations, in addition to improving rains in portion of South America and smaller export demand for U.S. soybeans. But oils futures fluctuate to rise on China’s Dalian Commodity Exchange today on the arbitrage of buying oils and selling meals. In the spot markets, soybean oil goes up 50-100 CNY/tonne and palm oil up 170-200 CNY/tonne. Buyers remain cautious in chasing after high prices, so the trade is lukewarm.

Malaysian November palm oil stockpiles fall to the lowest in over three years, while December exports are improving from a month earlier, which is bullish to the trend of palm oil futures. Meanwhile, soybean oil stocks in China keep falling with support from national purchases and as domestic crushers cut operation rates due to swelling meal inventories. And rapeseed oil stocks have been low in China, while domestic buyers will start stocking up packaging oils for the Lunar New Year. These bullish fundamentals keep the overall oils market in an uptrend in fluctuation. But buyers are cautious in the spot market, and Dalian soybean oil futures are still unable to effectively break through the key 8,000 level, which is affecting the market confidence and makes the market become volatile recently. In the short term, the oils market is predicted to stay volatile.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,180-8,280 CNY/tonne in domestic coastal areas, a rise of 50-100 CNY/tonne. (Tianjin traders 8180-8190; Rizhao traders 8270; Zhangjiagang traders 8280; and Guangzhou traders 8220-8230). 

Palm oil: RBD palm olein is mainly priced at 6,920-6,970 CNY/tonne in coastal areas, mostly up 170-200 CNY/tonne. (Tianjin traders 6960-6970, up 170; Rizhao 6970, up 170; Zhangjiagang traders 6920, up 200; Guangzhou traders 6920, up 180; and Xiamen not available).

Rapeseed oil: U.S. soybean futures closed lower on Thursday, as the cuts in soybean stocks by the USDA report were smaller than the market expectations, in addition to improving rains in portion of South America and smaller export demand for U.S. soybeans. On China’s Zhengzhou Commodity Exchange today, the most-active rapeseed oil contract stay above the previous close, in spite of a loss. Spot rapeseed oil prices rise by 40 CNY to 9,730-9,880 CNY/tonne in coastal regions in tepid trading.

Tensions between Beijing and Ottawa keep rapeseed crush low in China, and rapeseed oil stocks are only 178,000 tonnes in the country. Soybean oil stockpiles have accelerated the reduction and palm oil inventory is also low in China. Hence, there is no pressure in the oils supply side. Besides, the peak season for stocking up oils ahead of the Spring Festival is also approaching. These bolster rapeseed oil prices to snap off declines to rise. But soybean is in adequate supply in China due to huge cargo arrivals at ports, and the consumption of rapeseed oil is smaller under its huge price spread with soybean oil and palm oil, which will limit rises in rapeseed oil prices. Overall, short-term rapeseed oil market is forecast to stay at the high level, but the trade is mainly from rigid demand.

Cottonseed oil: Cottonseed oil prices keep steady with a partial rise of 50 CNY/tonne in China today. USDA report revised soybean stocks down, which was less than market-expected. Rainfall improved in South America and the demand for US soybean exports slowed down. In this case, U.S. soybean futures finished lower overnight. However, oils futures fluctuate to go up on China’s Dalian Commodity Exchange today on profit taking. In the spot market, soybean oil rises by 50-100 CNY/tonne and palm oil jumps 170-200 CNY/tonne higher. Malaysia’s palm oil stocks for November decline to a more than three-year low, which is bullish for market trend. In the meantime, domestic crushers keep lowering down operation rates for two consecutive weeks for swelling meal inventories. Likewise, soybean oil stocks persistently drop, and rapeseed oil stockpiles are also at low levels, while domestic buyers will soon start stocking up packaging oils for the Chinese Lunar New Year. Hence, fundamentals are still bullish, and the bulk oils market will keep an uptrend in fluctuation. Moreover, cottonseed oil millers are facing sustained loss, so that they have certain sentiment in lifting prices. Besides, downstream buyers are cautious due to weak demand in cottonseed oil market. Overall, cottonseed oil market will remain range-bound in the near term, but it is expected to go strengthening.

Sunflower oil: Sunflower oil prices steady and some mixed 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.

Downstream factory owners remain cautious and usually take hand-to-mouth buying as sunflower oil prices stay high, which is adding bearish impact to the market. However, Dalian oils futures fluctuate to rise on arbitrage of buying oils and selling meals today, and spot soybean oil and palm oil prices both climb. Moreover, soybean oil stocks in China is declining, and palm oil and rapeseed oil inventories both stay low. Besides, there exists a global inflation expectation. The overall fundamentals remain bullish in the market. Meanwhile, sunflowerseed prices are high due to a reduction in production. Therefore, domestic millers have strong sentiment in propping up sunflower oil prices. Overall, sunflower oil market in China is predicted to keep range-bound in the short run.

Corn oil: Corn oil prices are stable in China today. Grade I corn oil is offered at 10,100-10,300 CNY/tonne. (Shandong 10,100-10,300 CNY/tonne; Hebei 10,200; Liaoning 10,100; Sichuan 10,100); crude corn oil is offered at 8,300-8,700 CNY/tonne. (Hebei 8,550-8,600 CNY/tonne; Henan 8,500; Inner Mongolia 8,700).

As a continuous fall in corn germ prices is adding bearish sentiment to the market, in addition to high spot corn oil prices, the majority of millers tend to stay on the sidelines. This is weighing on the spot market. But millers have sentiment in lifting prices due to sustained losses. Overall, short-term corn oil market is predicted to have small downside space and to keep a strengthening pattern.

(USD $1=CNY ¥6.54)