Today (Feb 18), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: Domestic market trade has not returned to normal right after the lunar new year holidays, so purchases and sales are both poor, which is negative to imported soybean market. But port soybean supply is relatively small. And U.S. soybean prices are strong due to strong demand and as rainfalls delay soybean harvest in Brazil, so soybean import cost remains high in China. These are supporting imported soybean market. In a hybrid of the bull and the bear, short-term imported soybean market may be little changed in the short term. Participants can keep an eye on imported soybean arrivals and demand in China.

Cottonseed: Cottonseed prices in China are mostly not available today. Cottonseed crushing mills keep facing losses as cottonseed price remains too high. Besides, a majority of oil plants have not resume the operation yet, and a few operative factories mainly consume their stocks. In this case, cottonseed trading is light in market. However, cottonseed production this year is lower than the previous year. And ginning factories in Xinjiang successively suspend processing, seeing limited availability for cottonseed in market. This has offered a support to cottonseed market. It is expected that cottonseed price will stay strong at the high level in the near term.

Oils: 

Summary: USDA in February supply and demand report maintained Brazilian and Argentine soybean production projections unchanged, of which Brazil was expected to harvest 133 mln tonnes of soybeans and local farmers were harvesting crops. And the agency’s projection of U.S. season-ending soybean stocks were in par with the market forecast. Therefore, U.S. soybean futures fell 14.25 cents on cautious market sentiment during the Chinese New Year holidays (Feb 11-17). But during this period, crude oil gained 2.99 to 61.14 USD, and weak Malaysian currency also pushed palm oil futures to gain 212 ringgits, so oils futures also sharply advance on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil marches 370-480 CNY/tonne from that before the holidays, and palm oil by 400-440 CNY/tonne. Spot markets are forecast to be in thin trade as buyers remain cautious amid strong festival atmosphere.

Malaysian palm oil exports rose 38% month on month in the first half of February, data from SGS showed. International crude oil prices soar as the shutdown of wells, icy roads and power outrages could affect U.S. oil supplies. And the U.S. dollar also posts a weak outlook. These are all support Dalian futures. But soybean oil, palm oil and rapeseed oil stocks are small in China now. And imported soybean arrivals are forecast to be only 6.2 mln tonnes monthly in February and March, which may affect the soybean crush. Domestic oils market has strong support at its bottom, and thus starts the first session on a high note after the Chinese New Year holidays. The oils market is predicted to keep its strengthening trend in the short run, but BMD palm oil futures sharply retreat today, so participants can keep an eye on this an uncertain factor.

Soybean oil: GB Grade I soybean oil is mainly priced at 8,900-9,280 CNY/tonne in domestic coastal areas, a rise of 370-480 CNY/tonne from that before the holidays. (Tianjin traders 8900-8930; Rizhao traders 9000; Zhangjiagang traders 9160-9180; and Guangzhou traders 9280). 

Palm oil: RBD palm olein is mainly priced at 7,650-7,750 CNY/tonne in coastal areas, up 410-440 CNY/tonne from that before the holidays. (Tianjin traders 7650-7680, up 410; Rizhao traders 7750; Zhangjiagang traders 7680, up 440; Guangzhou traders not available; and Xiamen not available).

Rapeseed oil: U.S. soybean futures fell 1 cent to 1,383.75 cents on Wednesday and fell 14.25 cents from 1,398 cents on Feb 10. But supported by sharp gains on crude oil and BMD palm oil during the Chinese New Year holidays, oils futures open high to see sharp gains on China’s commodity exchanges today.

Chinese oil millers have strong sentiment to hike prices as oils supplies are not under pressure and imported soybean arrivals are forecast to be only 6.2 mln tonnes monthly in February and March. Besides, a weak U.S. dollar will probably be commonly seen as the U.S. introduces quantitative easing monetary policy. In the short term, rapeseed oil is predicted to strengthen at the high level.

Cottonseed oil: Cottonseed oil prices are mainly not available today but up 100 CNY/tonne in several regions. Oils futures move sharply higher on Dalian Commodity Exchange today. Compared with before the holidays, soybean oil soars by 370-480 CNY/tonne and palm oil jumps 400-440 CNY/tonne in the cash market. Domestic spot stocks of three major oils including soybean oil, palm oil and rapeseed oil stay at a relatively low level. Moreover, soybean arrivals during the month of February and March could be only 6.2 mln tonne each month, which may affect the operation rates in crushing mills. A majority of oil plants have yet to resume the operation, which is bullish for cottonseed oil. But being a kind of blending oil, the downstream demand for cottonseed oil is limited. And cottonseed oil buying and selling are tepid now with the enchanting smell of Spring Festivals holidays. It is expected that short-term cottonseed oil market will keep strengthening at the high level.

Sunflower oil: Sunflower oil prices are mostly not available in China today, with some seeing a partial rise of 400-500 CNY. Grade I imported sunflower oil is offered at 11,000-11,300 CNY/tonne, and crude sunoil is offered at 10,500-10,700 CNY/tonne.

Global crude oil prices rose 2.99 to 61.14 USD during the Chinese Lunar New Year holidays, and weak Malaysian currency also pushed palm oil futures to gain 212 ringgits, so oils futures also sharply advance on Dalian today. Spot soybean oil prices climb 370-480 CNY/tonne from that before the holidays and palm oil by 400-440 CNY/tonne. In addition, sunflower oil import cost has been lifted as the reduction in Ukrainian sunflowerseed production has pushed higher prices. These are bolstering sunflower oil market. However, sunflower oil is more expensive than corn oil in China now, so that most downstream buyers tend to choose the latter. In the near term, sunflower oil prices in China may fluctuate to strengthen.

Corn oil: Corn oil prices are mostly not available in China today. Grade I corn oil price is not offered and crude corn oil is offered at 8,800 CNY/tonne in Henan Province.

Corn oil prices are not competitive compared to rival oils, in addition to limited demand, which is weighing down the market. But some domestic processors have not started operation amid strong festival sentiment, so spot corn oil stocks are still tight at present. Overall, short-term corn oil market is predicted to keep steady in China.

(USD $1=CNY ¥6.45)