Today (Jan 13), 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 0.02-0.05 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 surged to finish above 1,400 cents on Tuesday on a bullish USDA monthly report and continued dryness in South America. But oils futures just post small gains on China’s Dalian Commodity Exchange today as investors go long in meal and short in oils, of which palm olein futures stay just above the previous close. In the spot markets, soybean oil go up 20-60 CNY/tonne and palm oil partially down by 20-30 CNY/tonne, both in tepid trade.

Oils shipments have been slow now as logistics are affected by the coronavirus pandemic in northern China, and the oils market has been in subdued trade recently, which are negative to prices. But high U.S. soybean prices make net crushing margins for imported U.S. soybean on Dalian suffer sustained loss, and Chinese soybean processors were keeping the crush at low levels in the past two weeks. While domestic oils market is in small supply under low soybean oil, palm oil and rapeseed oil stockpiles, mid-and-downstream buyers still have demand ahead of the Chinese Lunar New Year. The overall oils market is predicted to extend a relatively strong trend at high levels on favorable fundamentals, and the adjustments will be small even if there is any.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,740-9,050 CNY/tonne in domestic coastal areas, a rise of 20-60 CNY/tonne. (Tianjin traders 8740-8770; Rizhao traders 8800; Zhangjiagang traders not available; and Guangzhou traders 9050). 

Palm oil: RBD palm olein is mainly priced at 7,490-7,520 CNY/tonne in coastal areas, partially down 20-30 CNY/tonne. (Tianjin traders 7510-7520, down 30; Rizhao traders not available; Zhangjiagang traders 7490, flat; Guangzhou traders 7490-7510, down 20; and Xiamen not available).

Rapeseed oil: U.S. soybean futures sharply rose on Tuesday on a bullish USDA monthly report and continued dryness in South America. Rapeseed oil futures fluctuate to rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle at 10,670-10,720 CNY/tonne in coastal regions in tepid trading.

High U.S. soybean prices make net crushing margins for imported U.S. soybean on Dalian suffer sustained loss, and domestic soybean crush fell 1.42% to 1.68 mln tonnes last week. Currently, domestic soybean oil stocks have fallen to 884,000 tonnes, rapeseed oil stockpiles are only 161,000 tonnes in coastal regions, and domestic palm oil inventory is also at a low level; hence, there is no pressure in oils supply. And mid-and-downstream buyers will still have some demand ahead of the Spring Festival. Therefore, rapeseed oil market is predicted to keep a relatively strong pattern ahead of the festival. But funds have a character of instability 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; thus, it is also necessary to prevent risks of short-term fluctuations.

Cottonseed oil: Cottonseed oil prices stay stable with a partial fluctuation of 50-150 CNY/tonne in China today. CBOT soybean futures skyrocketed to over 1,400 cents on bullish USDA report and prolonged dry condition in South America. But oils futures take a marginal rise on China’s Exchanges today due to profit taking from buying meal and selling meal. Spot soybean oil grows 20-60 CNY/tonne. 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 crush has stayed at low levels for a second straight week, and soybean oil stocks further dip to around 880,000 tonnes. Also, rapeseed oil and palm oil stockpiles are at low levels. In this case, oils supply is limited in domestic market. Hence, the overall bulk oils market will maintain an uptrend before the Lunar New Year based on supportive fundamentals. For cottonseed crushing mills lower the operation rate, cottonseed oil market will still stay strong at the high level on the whole.

Sunflower oil: Sunflower oil prices steady with a partial rise of 100 CNY in China today. Grade I imported sunflower oil is offered at 10,500-10,800 CNY/tonne; crude sunoil is offered at 10,300-10,400 CNY/tonne.

High U.S. soybean prices make net crushing margins for imported U.S. soybean on Dalian suffer sustained loss, and Chinese soybean processors were keeping the crush at low levels in the past two weeks. While domestic oils market is in small supply under low soybean oil, palm oil and rapeseed oil stockpiles, mid-and-downstream buyers still have demand ahead of the Chinese Lunar New Year. In sunflower oil market, import cost has been lifted by high prices in Ukraine, and feedstock sunflowerseed prices also keep rising, so domestic millers have strong sentiment to support prices, which is bullish to sunflower oil market. But the oils market is in slow shipment as logistics are affected by the coronavirus pandemic in northern China. In addition, consumers are buying more corn oil as sunflower oil prices remain high, which is also bearish to the market. In the short term, domestic sunflower oil prices are likely to keep range-bound.

Corn oil: Corn oil prices are mostly stable and some rising in China today. Grade I corn oil is offered at 10,200-10,500 CNY/tonne, a rise of 100-200 CNY from yesterday. (Shandong 10,500 CNY/tonne, up 200 CNY; Hebei not available; Liaoning 10,200, up 100 CNY; Sichuan not available); 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 downstream buyers have strong sentiment to stay on the sidelines at current high corn prices, 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)