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Daily Review on Markets for Oilseeds and Oils in China--1/20/2021


Today (Jan 20), 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 further decline by 0.04 CNY/kg in portions of China today. 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. However, cottonseed production 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. 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 soybean futures retreated for a second straight session on Tuesday on profit-taking after beneficial rains in South America during the weekend, and BMD palm oil futures hit a nearly two-month low on concerns over export demand. Oils futures also post wide losses on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes down 50 CNY and palm oil down 80-110 CNY, both in thin trade.


Malaysian palm oil exports fell 41% month on month during Jan 1-20, and Chinese investors have the demand to recoup funds ahead of the Lunar New Year. Meanwhile, Chinese crushers picked up weekly soybean crush to 1.98 mln tonnes and may continue hiking it to over 2 mln tonnes in coming two weeks. Hence, Dalian oils futures move downward under pressure. But China’s soybean oil stocks will probably decline to 800,000 tonnes before the Lunar New Year and some regions are still in tight supplies, and domestic rapeseed oil stocks also remain low; thus, oil millers have no pressure in shipment. Besides, market participants could again speculated on weather in South America at any time. The overall fundamentals are still positive in the oils market. It can not be concluded that the market has been on a downtrend, as this may be just a wave of sharp losses. In the short run, the oils market will continue following futures to fluctuate and adjust, and buyers can stay on the sidelines.


Soybean oil: GB Grade I soybean oil is mainly priced at 8,360-8,760 CNY/tonne in domestic coastal areas, a decline of 50-150 CNY/tonne. (Tianjin traders 8360; Rizhao traders 8450; Zhangjiagang traders not available; and Guangzhou traders 8710-8760).


Palm oil: RBD palm olein is mainly priced at 7,030-7,150 CNY/tonne in coastal areas, mostly down 80-110 CNY/tonne. (Tianjin traders 7130-7150, down 100; Rizhao traders 7090, down 110; Zhangjiagang traders 7100, down 80; Guangzhou traders 7030-7050, down 100; and Xiamen not available).


Rapeseed oil: CBOT soybean futures further retreated on Tuesday on profit-taking triggered by beneficial rains in South America during the weekend, and BMD palm oil futures hit a nearly two-month low on concerns over export demand. Oils futures are down on China’s commodity exchanges today, led by palm olein. Spot rapeseed oil prices settle down 110-160 CNY at 10,390-10,520 CNY/tonne in coastal regions in tepid trading.


Chinese crushers picked up soybean crush by 18% to 1.98 mln tonnes last week under easing meal inventory pressure, will likely further raise it to 2 mln tonnes weekly in coming two weeks. Moreover, 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 have fallen to 143,000 tonnes and soybean oil stocks to 848,000 tonnes, whilst mid-and-downstream buyers are still stocking up for the festival; hence, oil millers are not under shipment pressure. Besides, market participants could speculate on weather in South America at any time. The overall fundamentals are still bullish in the oils market. As U.S. soybean futures have seen sharp losses, short-term rapeseed oil market in China will follow to decline and adjust.


Cottonseed oil: Cottonseed oil prices stay stable with a partial decrease of 50-200 CNY/tonne in China today. U.S. soybean futures tumbled on Tuesday on profit taking incurred by favorable rainfall in South America during the weekend. Palm oil set a nearly two-month low on Bursa Malaysia Derivatives. Likewise, Dalian oils futures broadly fall back today. In the cash market, soybean oil down by 50-150 CNY/tonne and palm oil down by 80-110 CNY/tonne. Investors are in needs of recouping funds with the forthcoming Spring Festival, and soybean crush has increased by 18% to 1.98 mln tonnes, pressuring all futures. 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. Thus, cottonseed oil price is dragged down. On the other side, domestic soybean oil supply is still tight currently in some regions, and rapeseed oil stockpiles are also at low levels. And the operation rate in cottonseed crushing mills is low. Based on the bullish fundamentals, short-term cottonseed oil market may fluctuate to fall from the high level.


Sunflower oil: Sunflower oil prices are stable and some mixed in China today. Grade I imported sunflower oil is offered at 10,450-11,300 CNY/tonne, and crude sunoil is offered at 10,400-10,500 CNY/tonne, partially mixed by 50-300 CNY/tonne.


China’s soybean oil stocks further drop to 848,000 tonnes, with the supply still tightening in some regions, and rapeseed oil and palm oil inventories also keep low; hence, the oils market is still well supported at its bottom. Sunflower oil import cost has been lifted by high prices in Ukraine, so Chinese manufacturers have strong sentiment to prop up prices. These are bullish to sunflower oil market. But CBOT soybean futures eased for a second straight session on profit-taking after good weekend rains in some South American crop areas, and BMD palm oil futures crashed to a fresh low in recent two months amid concerns over export demand. As a result, Dalian oils futures also post wide losses today, and spot soybean oil down by 50-150 CNY and palm oil down by 80-110 CNY, which is bearish to sunflower oil. Overall, sunflower oil prices in China may fluctuate to adjust in the short term and keep an uptrend on the whole.


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 ¥6.48)