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Daily Review on Markets for Oilseeds and Oils in China--1/19/2021


Today (Jan 19), the market for oilseeds and oils in China is shown as follows:




Imported soybean: Imported soybeans are offered at 5,300-5,400 CNY/tonne at Shandong ports today. Port stocks total about 15,000 tonnes at Shandong ports now, and tight supply is strongly supporting the market sentiment, with some holders limiting shipment. 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. In the short term, imported soybean market is predicted to keep a strong trend on tight supply and high cost.


Cottonseed: Cottonseed prices decline by 0.01-0.04 CNY/kg in portions of 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, 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 cottonseed price will fluctuate at the high level in the near term in the wake of falls in meals and oils.




Summary: CBOT was closed on Monday and U.S. soybean futures lose more ground and drop below 1,400 cents after trade resumed today. Oils futures decline on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil go down 30-100 CNY/tonne, both in thin trade.


Malaysian palm oil exports fell more than 42% month on month in the first half of January. With easing pressure in soybean meal inventory, Chinese processors may further pick up weekly soybean crush to 2.0-2.05 mln tonnes in the coming two weeks, which will continue pressuring on Dalian futures. But soybean oil is still in tight supply in portions of China, with nationwide stocks further falling by 4% weekly to 848,800 tonnes. And domestic rapeseed oil stocks also remain low. Meanwhile, mid-to-downstream buyers are still stocking up for the festival, so oil millers are not under shipment pressure. Moreover, soybean harvest progress is at a slow pace in Brazil, and U.S. soybean futures remain high amid robust demand. Hence, there is still strong support at the bottom of the oils market. In a hybrid of the bull and the bear, short-term oils market will follow futures to fluctuate frequently.


Soybean oil: GB Grade I soybean oil is mainly priced at 8,470-8,860 CNY/tonne in domestic coastal areas, a decline of 10-100 CNY/tonne. (Tianjin traders 8470; Rizhao traders 8500; Zhangjiagang traders not available; and Guangzhou traders 8840-8860). 


Palm oil: RBD palm olein is mainly priced at 7,140-7,240 CNY/tonne in coastal areas, mostly down 10-30 CNY/tonne. (Tianjin traders 7240, down 20; Rizhao traders 7210, down 30; Zhangjiagang traders 7190, down 10; Guangzhou traders 7140, down 30; and Xiamen not available).


Rapeseed oil: CBOT was closed on Monday. Rapeseed oil futures stay below the previous closed albeit some gains on Chinas Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle down 10 CNY at 10,480-10,710 CNY/tonne in coastal regions in tepid trading.


Chinese processors will pick up weekly soybean crush to 2 mln tonnes in the coming two weeks due to ample soybean supply. And the consumption of rapeseed oil in China is affected by its big price spread with soybean oil and palm oil. But domestic rapeseed oil stocks are only 142,500 tonnes and soybean oil stockpiles have further fallen to 848,000 tonnes; thus, domestic oils market is under small supply and oil mills are not under shipment pressure. Overall, rapeseed oil market is predicted to have limited downside space in the short run and to fluctuate at high levels to keep strengthening on the whole.


Cottonseed oil: Cottonseed oil prices stay stable with a partial increase of 50 CNY/tonne in China today. Domestic soybean oil supply is still tight currently in some regions, and soybean oil stocks further dip by 4% to 848,000 tonnes. Also, rapeseed oil stockpiles are at low levels. Moreover, mid-and-downstream buyers are still stocking up ahead of the Chinese New Year. Plus, the strength on US soybean prices has offered support to oils fundamentals. Cottonseed crushing mills also lower the operation rate, boosting cottonseed oil market. CBOT was closed on Monday. And soybean futures dip below 1,400 cents today after the trading resumes. Due to this, oils futures on Dalian Commodity Exchange also fall back. In the spot market, soybean oil and palm oil decrease by 30-100 CNY/tonne. Besides, downstream buyers are cautious in purchasing cottonseed oil now due to sluggish demand in market after a price hike, leading to a subdued trade. It is expected that short-term cottonseed oil market will fluctuate at the high level.


Sunflower oil: Sunflower oil prices are stable with a partial rise in China today. Grade I imported sunflower oil is offered at 10,500-11,200 CNY/tonne, and crude sunoil is offered at 10,400-10,500 CNY/tonne, partially up by 200 CNY/tonne.


Soybean oil is still in tight supply in some regions of China, with nationwide stocks falling by 4% weekly to 848,000 tonnes. And domestic rapeseed oil and palm oil stockpiles are also low, so oil mills are not under pressure. Meanwhile, U.S. soybean prices are still at high levels, so the oils market still has strong support at its bottom. And domestic buyers will also continue stocking up for the 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 U.S. soybean futures lose more ground to fall below the key level of 1,400 cents after trade resumed on CBOT today. Oils futures also post losses on China’s Dalian Commodity Exchange today, and spot soybean oil and palm oil both decline, which is bearish to sunflower oil market. In the short term, sunflower oil prices may fluctuate at high levels.


Corn oil: Corn oil prices steady in China today. Grade I corn oil is offered at 10,200-11,000 CNY/tonne. (Shandong 11,000; Hebei not available; Liaoning 10,200; Sichuan 10,500); crude corn oil is offered at 8,650-9,200 CNY/tonne. (Hebei 9,000-9,200; Henan 8,650; Inner Mongolia 9,000).


Some enterprises still have sentiment to support prices due to a sustained rise in feedstock corn germ prices and as corn germ is in reducing supply, which is likely to be positive to corn oil market. But downstream buyers tend to stay on the sidelines as corn oil prices have risen to high levels. Besides, the market shipment is slow as logistics are affected by the pandemic in northern China. And some large factories have wrapped up replenishment for the Chinese Lunar New Year, so the demand is not as good as before. Overall, corn oil market in China is predicted to keep strengthening.


(USD $1=CNY ¥6.49)