Today (Dec 23), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: U.S. Gulf soybean is offered at 4,950 CNY/tonne at Shandong ports today, a rise of 50 CNY/tonne from yesterday. 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 continue rising. 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 addition, auctions of imported soybeans are underway, with 59,000 tonnes all sold yesterday. 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. 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: U.S. soybean futures further rose on Tuesday on strong U.S. soybean demand, a lingering worker strike in Argentina and a possible reduction in Brazilian soy production. Oils futures decline but stay above the previous close on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil fluctuates by 30-150 CNY/tonne and palm oil up 80-140 CNY/tonne, both in thin trade.

Soybean crush in China remains high under enormous cargo arrivals at ports, and recent sharp rises in soybean meal prices also make for easing swollen meal inventory and raising operation rates. In addition, funds are also unstable toward the end of the year. The oils market has been in lukewarm trade recently, of which soybean oil market almost had no buyer yesterday. Therefore, the oils market goes into the correction territory. However, Dalian oils futures are notably resilient due to following factors. Indonesia has confirmed to allocate its biodiesel blending quota in 2021 at 9.2 mln kilolitres, higher than the market rumor of 8.5 mln kl. Moreover, oil mills in Rizhao are still in downtime under requirements by the environmental protection. Domestic soybean oil stocks have fallen to 1.02 mln tonnes, and rapeseed oil stockpiles also stay low. Short-term oils market is predicted to have little downside space and to keep an uptrend in fluctuation, but Dalian oils futures are in volatile trade, so it is necessary to remain cautious.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,450-8,540 CNY/tonne in domestic coastal areas, fluctuating by 30-150 CNY/tonne. (Tianjin traders 8480; Rizhao traders 8450; Zhangjiagang traders 8490-8540; and Guangzhou traders 8490). 

Palm oil: RBD palm olein is mainly priced at 7,020-7,110 CNY/tonne in coastal areas, mostly up 80-140 CNY/tonne. (Tianjin traders 7110, up 140; Rizhao 7050, up 110; Zhangjiagang traders 7020-7050, up 80; Guangzhou traders 7020, up 100; and Xiamen not available).

Rapeseed oil: U.S. soybean futures further rose on Tuesday on strong U.S. soybean demand, a lingering worker strike in Argentina and a possible reduction in Brazilian soy production. Rapeseed oil futures decline but stay above the previous close on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 60 CNY at 9,850-9,970 CNY/tonne in coastal regions in tepid trading.

Rapeseed crush in China remains low as the country is less likely to see a detente in tensions with Canada shortly. China’s rapeseed oil supply is tight with only 161,000 tonnes now, and soybean oil stocks also keep falling to 1.02 mln tonnes. During December 1-20, Malaysian palm oil production expanded the decline to 17% from a month earlier. Fundamentals are still supportive in the oils market, which is propping up rapeseed oil prices. However, soybean arrivals at domestic ports are huge and its supply is thus adequate. Moreover, the consumption of rapeseed oil is smaller under its huge price spread with soybean oil and palm oil. In addition, the coronavirus pandemic gets worse in Europe now, and domestic investors could recoup funds at the end of the year at any moment, which will add to fluctuations in the market. In the short term, rapeseed oil market is predicted to stay at the high level, and the trade is mainly from rigid demand.

Cottonseed oil: Cottonseed oil prices keep steady with a partial decline of 50 CNY/tonne in China today. Soybean arrival has been enormous at ports. Oil trading becomes light recently, leading to swings in oils market. Besides, downstream buyers are cautious due to weak demand in cottonseed oil market, causing cottonseed oil price to fall back. However, soybean oil stocks further decline by 1.49% to 1.02 mln tonnes as crushers have been suspending 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. Therefore, it is predicted that short-term cottonseed oil market will not drop too much and keep strengthening on the whole.

Sunflower oil: Sunflower oil prices are mostly stable and some mixed in China today. Grade I imported sunflower oil is offered at 10,150-10,800 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 the market is in thin trade, 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).

As corn germ prices bounce today and corn oil mills face sustained losses, coupled with the start of the peak season for stocking up packaging oils, domestic millers still have intention to hike corn oil prices. But corn oil price itself is high, which may be adding bearish sentiment to the market. Overall, corn oil market is predicted to keep strengthening.

(USD $1=CNY ¥6.56)