Today (Jan 7), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: U.S. Gulf soybean is offered at 5,100 CNY/tonne at Shandong ports today. Some domestic holders are stalling soybean sales under tightening supply at ports, and soybean import cost remains high at present as U.S. soybean prices rally on worries about weather condition in South America. These together bolster port imported soybean prices to go strengthening. But soybean arrivals are increasing at domestic ports due to huge imports from the U.S., so it is quite likely that imported soybean supply will further grow in domestic market. In the short run, imported soybean market is predicted to keep strengthening on bullish factors.

Cottonseed: Cottonseed prices further increase by 0.02-0.10 CNY/kg in 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 and ranchers have started stocking up ahead of the Chinese New Year, 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, so traders and oil plants are cautious in making purchase. It is expected that short-term cottonseed price will stay firm as oils and meals go up together.

Oils: 

Summary: U.S. soybean futures further rose on Wednesday on strong U.S. soybean exports and as continued dry weather lowered down forecasts for soybean production in Brazil and Argentina. Oils futures continue rising but notably narrow gains on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil go up 10-50 CNY/tonne, both in tepid trade.

Malaysian palm oil production is forecast to drop 8-12% month on month in December, while exports grow by 10-20%, under which December-ending stockpiles will fall to a historical low level of around 1.20 mln tonnes. BMD palm oil futures thus kept rallying. Moreover, U.S. soybean futures have broken the level of 1,350 cents and still have upward momentum, so that soybean import cost keeps increasing in China. Besides, domestic soybean oil stocks further reduced by 4% to 958,000 tonnes as soybean crush fell 9.2% to 1.71 mln tonnes last week, and several mills have completed sales for the first quarter. Meanwhile, domestic rapeseed oil stocks are also low, and importers have booked very few palm oil cargoes in the first quarter. Therefore, the oils market is predicted to extend a strong pattern, but it is necessary to avoid risks of short-term fluctuations in the wake of sharp gains, as Dalian oils futures narrow down gains in afternoon trade.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,870-9,140 CNY/tonne in domestic coastal areas, a rise of 10-60 CNY/tonne and a partial decline of 10 CNY at several ports. (Tianjin traders 8870-8890; Rizhao traders 8880; Zhangjiagang traders not available; and Guangzhou traders 9120-9140). 

Palm oil: RBD palm olein is mainly priced at 7,650-7,690 CNY/tonne in coastal areas, mostly up 30 CNY/tonne. (Tianjin traders 7670-7690, up 30; Rizhao traders not available; Zhangjiagang traders 7650-7670, up 30; Guangzhou traders 7650, up 30; and Xiamen not available).

Rapeseed oil: CBOT soybean futures further rose on Wednesday, and BMD palm oil futures climbed for sixth straight session on Wednesday as Malaysian palm oil stocks and production were expected to see a sharp reduction in December. Rapeseed oil futures continue advancing but narrow gains on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle at 10,500-10,640 CNY/tonne in coastal regions in tepid trading.

China’s rapeseed oil stocks are only 125,000 tonnes and in supply tensions, and soybean oil and palm oil stockpiles are also low; hence, there is no pressure in supply. In addition, U.S. soybean futures keep climbing on an inflation expectation brought by a weak U.S. dollar and on concerns over dryness in South America. Overall, rapeseed oil market is expected to keep a strong pattern ahead of the Chinese Lunar New Year. But funds will be unstable ahead of the festival, and the consumption of rapeseed oil in China may also be affected by its big price spread with soybean oil and palm oil at present.

Cottonseed oil: Cottonseed oil prices further increase by 100 CNY/tonne in several regions of China today. U.S. soybean futures rose on Wednesday on strong export and prolonged dry condition in South America. Oils futures keep growing but distinctly narrow gains on China’s Dalian Commodity Exchange today. In the cash market, soybean oil palm oil up by 10-50 CNY/tonne. The cost of importing soybean is pulled up by climbing US soybean prices. In addition, market expects that Malaysian palm oil production during December will decline by 8-12% from a month earlier while exports represent a month-on-month increase of 18-20%. Moreover, soybean oil stocks further dip to around 950,000 tonnes. Also, rapeseed oil stockpiles are at low levels. Besides, cottonseed crushing mills reduce the operation rate. Hence, the overall bulk oils market will maintain an uptrend before the Lunar New Year. And short-term cottonseed oil market is projected to stay strong at the high level on the whole. Nevertheless, market participants had better keep a lookout of potential fluctuations after a surge in cottonseed oil price in the near term.

Sunflower oil: Sunflower oil prices steady with a partial rise of 200 CNY/tonne in China today. Grade I imported sunflower oil is offered at 10,200-10,800 CNY/tonne; crude sunoil is offered at 10,000-10,200 CNY/tonne.

U.S. soybean futures further rose on Wednesday on strong U.S. soybean exports and as continued dry weather lowered down forecasts for soybean production in Brazil and Argentina. Oils futures continue rising but notably narrow gains on Dalian, and spot soybean oil and palm oil go up 10-50 CNY/tonne.  And as soybean crush fell 9.2% to 1.71 mln tonnes last week, domestic soybean oil stocks further reduced by 4% to 958,000 tonnes and several mills have completed sales for the first quarter; and rapeseed oil and palm oil stockpiles also remain low in China. In addition, the cost of importing sunflower oil is lifted by high-level prices in Ukraine, which is also bullish to domestic market. Overall, sunflower oil prices will probably steady with a slight rise in the near term.

Corn oil: Corn oil prices are stable with a partial rise in China today. Grade I corn oil is offered at 10,000-10,400 CNY/tonne, up 100 CNY. (Shandong 10,200-10,400 CNY/tonne, up 100 CNY; Hebei 10,200; Liaoning 10,000; Sichuan not available); crude corn oil is offered at 8,500-8,600 CNY/tonne, up 100 CNY. (Hebei 8,500-8,600 CNY/tonne; Henan 8,600, up 100 CNY; Inner Mongolia 8,600).

Feedstock corn germ prices keep rising, and some millers have been out of stock or in tightening supplies while buyers have started to stocking packaging oils; hence, some domestic enterprises still have sentiment to support corn oil prices. Besides, oils futures continue rising on Dalian, which may also be bullish to corn oil market. But corn oil is not price-competitive compared to other oils, and crude corn oil supply is affected by the pandemic in Hebei Province. These may add some bearish sentiment. Overall, corn oil market in China is predicted to keep strengthening.

(USD $1=CNY ¥6.46)