Today (Feb 26), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: Domestic port soybean supply is increasing as cargoes from non-major producing countries are arriving at ports, whilst the market is in tepid trade, which are constraining the imported soybean market in China. But the overall port supply remains small at present. And the cost of importing soybeans stay stubbornly high as U.S. soybean prices are strong amid a slow crop harvest in Brazil. In a hybrid of the bull and the bear, short-term imported soybean market will be little changed. Participants can keep an eye on imported soybean arrivals and demand in China.

Cottonseed: Cottonseed prices in China partly stay stable and decline by 0.02 CNY/kg in several regions today. Cottonseed crushing mills keep facing losses as cottonseed price remains too high. Besides, a few operative factories mainly consume their stocks now. 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 are mostly shut down, seeing limited availability for cottonseed in market. This has offered a support to cottonseed market. With bulk oils and meals increasing, it is expected that cottonseed price will also keep strengthening in the near term.

Oils: 

Summary: U.S. soybean futures fell on Thursday on the disappointing export sales report and some profit-taking, and oils futures also retreat on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil go down 40-70 CNY/tonne, both in tepid trade.

Malaysian palm oil exports rose 5.64-7.99% in the first 25 days of February, against a rise of 10.27-14.88% in the first 20 days. At the same time, board also has some technical decline demand after consecutive sharp rallies. Hence, Dalian oils futures posted notable declines in early trade. But oils futures later start to recover losses on strong support in fundamentals. China’s soybean oil stocks are only 870,000 tonnes, well below the five-year average of 1.11 mln tonnes, so there is no pressure in supply. And domestic palm oil and rapeseed oil inventories are also low. Moreover, China’s monthly soybean imports are forecast to be only 620 mln tonnes on average in February and March, following sluggish harvest and shipment in Brazil. And the U.S. dollar is weak under the $1.9 trillion stimulus package, and weather in South America is also a hot issue, so U.S. soybean prices remain high and soybean import cost also stay stubbornly high. The oils market still has strong support at its bottom and will remain an overall strong trend. Short-term oils market is expected to strengthen again after this round of declines.

Soybean oil: GB Grade I soybean oil is mainly priced at 9,630-9,780 CNY/tonne in domestic coastal areas, a decline of 10-70 CNY/tonne. (Tianjin traders 9680-9700; Rizhao traders 9630; Zhangjiagang traders 9730; and Guangzhou traders 9780). 

Palm oil: RBD palm olein is mainly priced at 8,130-8,230 CNY/tonne in coastal areas, down 40-60 CNY/tonne. (Tianjin traders 8170-8200, down 40; Rizhao traders 8230, down 40; Zhangjiagang traders 8170, down 40; Guangzhou traders 8130-8150, down 60; and Xiamen not available).

Rapeseed oil: U.S. soybean futures closed lower on Thursday, and rapeseed oil futures open low and decline on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle down 100 CNY at 10,980-11,130 CNY/tonne in coastal regions in tepid trading.  

Huge spread between rapeseed oil and soybean/palm oil is affecting the consumption of the former in China, and the market demand is slim right after the lunar new year holidays. These are weighing on rapeseed oil prices. But no pressure is noted in oils supplies in domestic markets, for soybean oil, palm oil and rapeseed oil stocks are not huge. Besides, China’s monthly soybean imports may only be 6.2 mln tonnes on average in February and March and are distributed unevenly, so that the overall soybean crush will be inevitably affected. In addition, board net crush margins for imported U.S. soybeans are at loss. Overall, rapeseed oil market is predicted to have small downside space and to stay at the high level.

Cottonseed oil: Cottonseed oil prices keep steady with a partial increase of 100 CNY/onne in China today. At the moment, soybean oil stocks only amount to more than 800,000 tonnes, with no pressure on supply side. And palm oil and rapeseed oil stockpiles also stay at a relatively low level. Moreover, soybean arrivals in March are forecast to be only 95 cargoes or 6.2 mln tonne, mainly due to a delay in Brazilian soybean harvest and shipment, making many crushing mills idled for a period. The cost of importing soybean remains high, bolstering oils fundamentals. Thus, the overall oils market will continue the strength. In addition to this, a majority of oil plants have yet to resume the operation, which is bullish for cottonseed oil. But U.S. soybean futures dipped on Thursday. Oils futures stop rising and start falling on Dalian Commodity Exchange today. In the cash market, soybean oil and palm oil decline by 40-70 CNY/tonne. Given the sluggish cottonseed oil buying and selling currently, cottonseed oil market is likely to fluctuate in a short term but still maintain the high level on the whole.

Sunflower oil: Sunflower oil prices are mostly stable with a partial rise in China today. Grade I imported sunflower oil is offered at 11,500-12,200 CNY/tonne, and crude sunoil is offered at 11,500 CNY/tonne.

U.S. soybean futures fell on Thursday on weak export sales report and some profit-taking, and oils futures also retreat on China’s Dalian Commodity Exchange today. Spot soybean oil and palm oil prices are both down 40-70 CNY/tonne. Add to that, downstream buyers choose to use corn oil as sunflower oil prices stay at high levels, which is also bearish to the market. But sunflower oil import cost has been lifted as the reduction in Ukrainian sunflowerseed production has pushed higher prices. In the near term, sunflower oil prices in China may fluctuate to strengthen.

Corn oil: Corn oil prices are mostly stable with a partial rise in China today. Grade I corn oil price is 10,600-11,000 CNY/tonne, with a partial rise of 600 CNY. (Shandong 10,600 CNY, Hebei 10,700; and Liaoning 11,000, up 600); and crude corn oil is offered at 9,000-9,900 CNY/tonne, with a partial rise of 600 CNY. (Henan 9000, Hebei 9,000-9,900, up 600; and Inner Mongolia 9,300).

The processing cost for corn oil remains high due to a rise in feedstock corn germ prices, and there is no seller for crude corn oil in the market now. These are bullish to the market. But downstream buyers tend to wait after corn oil prices increase to such high levels. Overall, short-term corn oil market is predicted to maintain a strong trend in China.

(USD $1=CNY ¥6.47)