Today (Mar 2), 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 stays 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 rise by 0.02-0.03 CNY/kg in several regions today. 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. However, 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. The overall cottonseed market will stay strong. But market participants should keep a lookout at short-term declines in cottonseed which comes as the sharp fall on bulk oils and meals.

Oils: 

Summary: U.S. soybean futures fell on Monday, weighed on by a bumper crop outlook in Brazil. Oils futures retreat on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes down 100-160 CNY/tonne and palm oil down 220 CNY/tonne.

Malaysian palm oil futures also fell on Monday as shipping data showed a decline in February exports and an expected rise in production. And domestic funds show higher risk aversion sentiment after sharp gains, so Dalian oils futures set back drastically on profit -taking. However, fundamentals remain positive in China’s oils market currently: soybean oil stocks declined by 3% to 847,000 tonnes this week as soybean crush did not pick up much last week and soybean oil delivery is recovering with the end of the festival; and rapeseed oil and palm oil stocks are also low. And as China’s soybean imports are forecast to be only 95 vessels or 6.20 mln tonnes in March, some mills will suspend production for a lack of beans in March and April. Moreover, the U.S. House of Representative has passed the $1.9 trillion coronavirus package, which is very likely to be passed by the Senate too, so liquidity remains ample. Hence, the round of decline is seen as a normal phase after sharp gains, and the oils market is predicted to stay strong. Participants need to remain cautious as fund-driven market could fluctuate frequently.

Soybean oil: GB Grade I soybean oil is mainly priced at 9,640-9,890 CNY/tonne in domestic coastal areas, a decline of 100-160 CNY/tonne. (Tianjin traders 9,640-9,670; Rizhao traders 9,730; Zhangjiagang traders 9,840; and Guangzhou traders 9,840-9,890). 

Palm oil: RBD palm olein is mainly priced at 7,940-8,020 CNY/tonne in coastal areas, mostly down 220 CNY/tonne. (Tianjin traders 7980-8010, down 220; Rizhao traders 8020, down 220; Zhangjiagang traders 7940, down 220; Guangzhou traders 7940, down 220; and Xiamen not available).

Rapeseed oil: U.S. soybean futures fell on Monday as Brazilian producers were expected to harvest a bumper soybean crop. BMD crude palm oil futures closed lower on Monday on an outlook for higher production and as shipping data showed a decline in Malaysian palm oil exports in February. Dalian palm oil futures lead the decline in the oils market today. Spot rapeseed oil prices settle down 180-190 CNY at 10,850-10,950 CNY/tonne in coastal regions in tepid trading.

The consumption of rapeseed oil is affected by its huge price spread with soybean oil and palm oil. In addition, the market demand is slack after the festival. These are weighing on rapeseed oil prices. However, no pressure is noted in oils supplies in domestic markets, as soybean oil, palm oil and rapeseed oil stocks stay at the level for this time in history. Meanwhile, some domestic mills have a plan for downtime in March and April as soybean imports are forecast to be only 6.2 mln tonnes in March. In addition, net board crush margins for imported U.S. soybeans are at loss currently. This round of decline is seen as the normal adjustment after sharp gains, and rapeseed oil market is predicted to strengthen at the high level.

Cottonseed oil: Cottonseed oil prices partly increase by 200-400 CNY/onne in China today. The oils remain bullish on fundamentals. And buyers start taking delivery with festive air fading away. Soybean oil stocks have declined by 3% to 847,000 tonnes. Likewise, palm oil and rapeseed oil stockpiles stay at a relatively low level. Meanwhile, soybean arrivals in March are forecast to be only 95 cargoes or 6.2 mln tonne, making many crushing mills idled during the month of March and April. Thus, the overall oils market will continue the strength in the near term. In addition to this, a majority of oil plants have yet to resume the operation, which boosts for cottonseed oil price. However, U.S. soybean futures descended on Monday on anticipated Brazilian soybean bumper harvest. Oils futures stop rising and start falling on Dalian Commodity Exchange today. In the cash market, soybean oil drops by 100-160 CNY/tonne and palm oil plunges 220 CNY/tonne. Additionally, being a kind of blending oil, downstream demand for cottonseed oil is limited. It is projected that cottonseed oil market will follow bulk oils to fluctuate in a short term but still stay strong on the whole.

Sunflower oil: Sunflower oil prices are mostly stable with a partial rise in China today. Grade I imported refined sunflower oil is offered at 12,000-12,500 CNY/tonne, a partial rise of 100-400 CNY/tonne.

Currently, fundamentals remain positive in China’s oils market: soybean oil stocks declined by 3% to 847,000 tonnes this week as soybean crush did not pick up much last week and soybean oil delivery is recovering with the end of the festival; and rapeseed oil and palm oil stocks are also low. And sunflower oil import cost has been lifted as the reduction in Ukrainian sunflowerseed production has pushed higher prices. In the near term, sunflower oil market in China is predicted to stay at the high level.

Corn oil: Corn oil prices are stable in China today. Grade I corn oil price is 10,600-11,000 CNY/tonne. (Shandong 11,000 CNY, Hebei 11,000; and Liaoning 11,000); and crude corn oil is offered at 9,300-10,000 CNY/tonne. (Henan 9,500, Hebei 9,850-10,000; and Inner Mongolia 9,300).

The processing cost for corn oil remains high due to a rise in feedstock corn germ prices, and operation rates are lower as corn germ is in tight supply. Hence, oil millers have strong sentiment to support prices. 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 ¥6.46)