Today (Dec 22), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: U.S. Gulf soybean is offered at 4,900 CNY/tonne at Shandong ports today, a rise of 50 CNY/tonne from yesterday. As soybean of lower prices have almost been digested, in addition to limited supplies at ports now, some traders are stalling sales, which helps lifting prices. However, commodity inspections are relax at ports now, so that imported soybeans are in growing supplies. And imports of U.S. soybeans remain substantial, which will further add to supply in domestic market. Meanwhile, domestic purchasers have little appetite for imported soybeans. These are all negative to imported soybean market.

Cottonseed: Cottonseed prices increase by 0.02-0.03 CNY/kg in several regions of 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 short-term cottonseed price will keep steady and trend up.

Oils: 

Summary: More than 100 grain ships were kept from loading in Argentina as a wage strike by grain inspectors and oilseed workers stretched into its second week, coupled with concerns over weather in South America and strong U.S. soybean exports, so U.S. soybean futures continued sharp gains on Monday. But commodity and stock markets fell broadly in overnight trade as U.K coronavirus mutation prompted countries across Europe to announce strict lockdown measures. And on China’s Dalian Commodity Exchange today, oils futures fell in early trade and then fluctuate to move higher. Spot soybean oil fluctuates by 10-100 CNY/tonne and palm oil up 40-70 CNY/tonne in the morning, both in thin trade.

All oil mills in Rizhao are still in downtime subject to the environmental protection so far. Moreover, domestic soybean oil stocks fell further by 1.5% to 1.02 mln tonnes, and rapeseed oil stocks also remain low. From Dec 1 to 20, Malaysian palm oil production sank by 17% from a month earlier. Hence, fundamentals are still positive in the oils market. The overall market is predicted to go upward in fluctuation. But soybean arrivals at ports are enormous, and the sharp rise in soybean meal prices is also favorable to ease swollen meal inventories and raise soybean crush. In addition, the coronavirus pandemic is more severe in Europe and the United States. And the market may see a wave of fund withdrawal toward the end of the year, and participants may start the riskless arbitrage as margins for importing Argentine soybean oil is profitable now. Dalian oils futures take plunge in afternoon session, followed by spot offers in coastal regions. Therefore, it is necessary to avoid short-term fluctuation in the market, and buyers can stay on the sidelines.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,550-8,650 CNY/tonne in domestic coastal areas, fluctuating by 10-100 CNY/tonne. (Tianjin traders 8550; Rizhao traders 8600; Zhangjiagang traders 8610-8650; and Guangzhou traders 8630). 

Palm oil: RBD palm olein is mainly priced at 7,100-7,170 CNY/tonne in coastal areas, mostly up 40-70 CNY/tonne. (Tianjin traders 7170, up 40; Rizhao 7160, up 70; Zhangjiagang traders 7130, up 50; Guangzhou traders 7100, up 30; and Xiamen not available).

Rapeseed oil: U.S. soybean futures extended sharp gains on Monday as labour strikes in Argentina and dry weather in South America cracked down the global supply outlook, but commodity and stock markets fell broadly as U.K coronavirus mutation prompted countries across Europe to announce strict lockdown measures. Rapeseed oil futures modestly fell in morning session and expand losses in the afternoon on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle down 10-20 CNY at 9,940-10,060 CNY/tonne in coastal regions in tepid trading.

Domestic soybean crush rose 2.89% to 2 mln tonnes last week, as soybean imports remain huge in China. Moreover, the consumption of rapeseed oil is smaller under its huge price spread with soybean oil and palm oil. Spot rapeseed oil prices follow futures to expand declines. However, tensions between Beijing and Ottawa keep rapeseed crush low in China. China’s rapeseed oil stocks are only 161,600 tonnes at present, and soybean oil and palm oil inventories also remain low, so there is no pressure in supply. And the peak consumption ahead of the Chinese Lunar New Year is approaching. Overall, short-term rapeseed oil market is predicted to have limited downside space and maintain on the high level.

Cottonseed oil: Cottonseed oil prices keep steady with a partial rise of 50-100 CNY/tonne in China today. U.S. soybean futures continued soaring on strong export and worries about weather condition in South America. Oils futures pare gains on China’s Dalian Commodity Exchange in morning session and move higher later. In the spot market, palm oil rises by 40-70 CNY/tonne. However, soybean oil stocks further decline by 1.5% to 1.02 mln tonnes as crushers suspend operation due to environmental protection warning in Rizhao and domestic buyers have started stocking up packaging oils for New Year’s Day and the Chinese Lunar New Year. Also, rapeseed oil stockpiles are at low levels. Hence, oils fundamentals remain bullish. Moreover, cottonseed oil millers are facing sustained loss, so that they have certain sentiment in lifting prices. In addition, stocks and commodities tumble as a new coronavirus variant discovered in Britain sends Europe into lockdowns, spurring more severe situation. And soybean arrivals have been enormous, so downstream buyers are cautious in purchasing cottonseed oil. Therefore, cottonseed oil market is expected to fluctuate to stay strong in the near term.

Sunflower oil: Sunflower oil prices are mostly stable with a partial rise of 100-200 CNY/tonne in China today. Grade I imported sunflower oil is offered at 10,100-10,800 CNY/tonne; crude sunoil is offered at 9,650-9,750 CNY/tonne.

Subject to the early warning on environmental protection, oil mills in Rizhao, Shandong Province, all have to suspend production. Soybean oil stocks in China fell 1.5% to 1.02 mln tonnes in the week as of Dec 18, and rapeseed oil stockpiles also remain low. Meanwhile, sunflowerseed supply also sees a gap due to a decline in production, so that sunflower oil is also in tight supply. Oil mills are propping up sunflower oil prices, which is bullish to the market. However, soybean arrivals at domestic ports remain enormous, and the pandemic becomes more severe in European countries. And as sunflower oil prices have been at a high level recently, downstream manufacturers are cautious and tend to buy on immediate demand, which is adding bearish influence to the market. Overall, sunflower oil market in China is predicted to fluctuate and marginally climb in the short run.

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 not available); 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).

Corn germ prices keep falling from the high level at present, and spot corn oil prices also remain high, which are bearish to the market. But millers have sentiment in propping prices due to sustained loss and as buyers have started stocking up packaging oils. In the short term, corn oil market is predicted to be little changed and keep strengthening.

(USD $1=CNY ¥6.54)