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Daily Review on Markets for Oilseeds and Oils in China--1/21/2021


Today (Jan 21), 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 0.02-0.04 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: U.S. soybean futures further fell on Wednesday as an agency revised upward its production projection for Brazilian soybean crops that had received more rains. But oils futures fluctuate to rise on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil go up 40-130 CNY/tonne. Both markets may attract some low-level purchases but see thin trade at high levels.


Dalian oils futures rise in the wake of consecutive losses. Moreover, domestic soybean oil is still in tight supply and stocks may decline to 800,000 tonnes before the Lunar New Year, and domestic rapeseed oil stocks also remain low; thus, oil millers have no pressure in shipment. These bullish fundamentals bode well for mid-to-long-term trend in oils market. Therefore, if Dalian futures coordinate well, domestic millers will actively follow to raise prices. In the short term, domestic oils market is predicted to follow futures to move upward. But domestic soybean crush may breach 2 mln tonnes weekly in the next two weeks, and investors also want to recoup funds ahead of the Lunar New Year. The oils market is thus more volatile and may have no sharp rises before the festival. Buyers are suggested to make appropriate replenishment if with inadequate stocks, but not to chase after excessively higher prices.


Soybean oil: GB Grade I soybean oil is mainly priced at 8,430-8,830 CNY/tonne in domestic coastal areas, partially up 50-90 CNY/tonne. (Tianjin traders 8430; Rizhao traders 8450; Zhangjiagang traders not available; and Guangzhou traders 8830). 


Palm oil: RBD palm olein is mainly priced at 7,080-7,200 CNY/tonne in coastal areas, mostly up 40-130 CNY/tonne. (Tianjin traders 7150-7170, up 40; Rizhao traders 7200, up 130; Zhangjiagang traders 7130, up 100; Guangzhou traders 7080-7100, up 70; and Xiamen not available).


Rapeseed oil: U.S. soybean futures continued losses on Wednesday, but rapeseed oil futures fluctuate to rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 120 CNY at 10,470-10,650 CNY/tonne in coastal regions in tepid trading.


Net crush margins for imported soybeans are still at loss on Dalian due to high import cost. Currently, domestic rapeseed oil stocks have fallen to 143,000 tonnes and soybean oil further to 848,000 tonnes, whilst mid-to-downstream buyers are stocking up for the Spring Festival, so oil millers have no pressure in shipment. In addition, market participants may speculate on weather in South America at any time. Hence, the overall fundamentals are still bullish. Rapeseed oil prices follow futures to rally today and may fluctuate at high levels to keep strengthening 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, so the market will probably fluctuate frequently.


Cottonseed oil: Cottonseed oil prices stop dropping and turn to stabilize today. Soybean crush is likely to exceed 2 mln tonnes in the two coming weeks amid huge imports. At the moment, downstream buyers are cautious in purchasing cottonseed oil due to sluggish demand in market after a price hike, leading to a subdued trade. Accordingly, cottonseed oil tends to be steady. However, oil futures fluctuate to go up on Dalian Commodity Exchange today. Soybean oil and palm oil increase by 40-130 CNY/tonne in the spot market. On the other side, domestic soybean oil supply is still tight currently in some regions, and its inventories will possibly decline to 800,000 tonnes nationwide before the Spring Festival. Likewise, rapeseed oil stockpiles are at low levels. Plus, the operation rate in cottonseed crushing mills is low. Based on the bullish fundamentals, cottonseed oil market may stabilize in a short term and maintain the high level on the whole.


Sunflower oil: Sunflower oil prices are mostly stable and some down by 200 CNY 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.


As sunflower oil is more expensive than its rival corn oil, a majority of downstream buyers choose the latter, which is bearish to sunflower oil market. However, Dalian oils futures fluctuate to rise today and spot soybean oil and palm oil also go up. Moreover, domestic soybean oil is still in tight supply and stocks may decline to 800,000 tonnes before the Lunar New Year, and domestic rapeseed oil stocks also remain low. Meanwhile, 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. On the whole, 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 8,700; Inner Mongolia 9,000).


Feedstock corn germ prices remain high, and some enterprises are still stocking up for the festival, so some sellers have sentiment to prop up prices. This is bullish 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. Overall, corn oil market in China is predicted to keep strengthening.


(USD $1=CNY ¥6.47)