Today (Jan 12), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: Some holders in China 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 and purchases by China. These together bolster port imported soybean prices to go strengthening. But soybean imports from the U.S. remain huge, so it is quite likely that imported soybean supply will further grow in domestic market. Supported by tight supplies and high import cost, short-term imported soybean market will likely keep a strong trend.

Cottonseed: Cottonseed prices further increase by 0.01-0.04 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 fell on Monday on beneficial rains in South America during the weekend, and oils futures extend losses on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes down 50-130 CNY/tonne and palm oil down 40-50 CNY/tonne, possibly attracting some low-level purchases.

Malaysian palm oil exports were 260,000 tonnes in the first ten days of January, a month-on-month decline of 35%, data from ITS showed. BMD palm oil futures thus retreated in response. And Chinese investors are still going long in soybean meal positions, which is also weighing down oils futures. However, net crush margins for U.S. soybeans on Dalian post continued losses due to high U.S. soybean prices. And domestic soybean oil stocks further dropped by 7.7% to 884,000 tonnes last week as soybean crush fell 1.42% to 1.68 mln tonnes. Meanwhile, domestic rapeseed oil and palm oil stockpiles are also low, and mid-to-downstream buyers will continue stocking up for the Spring Festival. Overall, domestic soybean oil market is predicted to have limited downside space in the short term and to stay strong at high levels ahead of the festival. The USDA was expected to revise down U.S. soybean ending stocks to 139 mln bushels in its monthly supply/demand report due on Tuesday, so participants can keep a close eye on whether the reduction will be bigger than the forecast.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,690-8,960 CNY/tonne in domestic coastal areas, a decline of 50-130 CNY/tonne. (Tianjin traders 8690-8710; Rizhao traders 8750; Zhangjiagang traders not available; and Guangzhou traders 8960).

Palm oil: RBD palm olein is mainly priced at 7,470-7,550 CNY/tonne in coastal areas, mostly down 40-50 CNY/tonne. (Tianjin traders 7500-7510, down 50; Rizhao traders 7550, down 40; Zhangjiagang traders 7470, down 50; Guangzhou traders 7470, down 50; and Xiamen not available).

Rapeseed oil: U.S. soybean futures fell on Monday on favorable rains in South America during the weekend and as traders squared positions ahead of the USDA soybean supply and demand report for January. And BMD palm oil futures also declined on Monday on disappointing export data in Malaysia. Oils futures follow to drop on China’s commodity exchanges today. Spot rapeseed oil prices settle down 30-60 CNY at 10,610-10,710 CNY/tonne in coastal regions in tepid trading.

China’s soybean crushers will likely pick up operation rates again in the next two weeks with ample stocks lying in mills. 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. But domestic rapeseed oil stockpiles are still low and soybean oil inventory has also fallen further by 7.7% weekly to 884,400 tonnes, whilst mid-and-downstream buyers still have some demand for stocking up ahead of the Lunar New Year. Overall, rapeseed oil market is predicted to have limited downside space in short term and keep strong at the high level ahead of the festival.

Cottonseed oil: Cottonseed oil prices stay stable in China today. CBOT soybean futures closed down overnight on more than expected rain in South America. Oils futures pare gains on China’s Dalian Commodity Exchange in today. In the cash market, soybean oil down by 50-130 CNY/tonne and palm oil down by 40-50 CNY/tonne. And palm oil responds to fall back on Bursa Malaysia Derivatives. Likewise, oils futures move lower on persistent profit taking, which also weighs on cottonseed oil market. On the other side, net crush margins for soybean futures have been negative as the import cost is pulled up in China by climbing US soybean prices. Moreover, domestic soybean oil stocks further dip by 7.7% to 884,000 tonnes. Also, rapeseed oil and palm oil stockpiles are at low levels. Besides, oils supply is limited in domestic market, and downstream buyers are still in need of stocking up before the Lunar New Year. Hence, the overall bulk oils market will maintain an uptrend before the Lunar New Year. And cottonseed oil market will not drop too much in the near term and still stay strong at the high level on the whole.

Sunflower oil: Sunflower oil prices steady with a partial decline of 100 CNY in China today. Grade I imported sunflower oil is offered at 10,400-10,900 CNY/tonne; crude sunoil is offered at 10,300-10,400 CNY/tonne.

U.S. soybean futures fell on Monday on beneficial rains in South America during the weekend. Oils futures also continue a downtrend on China’s Dalian Commodity Exchange today, and spot soybean oil goes down 50-130 CNY/tonne and palm oil down 40-50 CNY/tonne. Consumers are buying more corn oil as sunflower oil prices remain high, which is bearish to the market. But China’s soybean oil stocks keep reducing and rapeseed oil stockpiles also remain low, whilst demand has come as mid-and-downstream buyers are stocking up for the Chinese Lunar New Year. And December-end palm oil inventory in Malaysia are forecast to decline to a historical low of 1.20 mln tonnes, so tight supply is now supporting a strong trend in palm oil prices. Moreover, the import cost of sunflower oil is climbing due to high prices in Ukraine, and sunflowerseed prices also keep increasing; hence, domestic millers have strong sentiment to support prices, which is bullish to the market. In the short term, domestic sunflower oil prices are likely to keep range-bound.

Corn oil: Corn oil prices steady in China today. Grade I corn oil is offered at 10,100-10,300 CNY/tonne. (Shandong 10,300 CNY/tonne; Hebei not available; Liaoning 10,100; Sichuan 10,300); crude corn oil is offered at 8,600-8,900 CNY/tonne. (Hebei 8,900; Henan 8,600; Inner Mongolia 8,800).

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. This 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 ¥6.48)