Today (Mar 4), 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 fluctuate by 0.02 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 on account of excessive growth in cottonseed price. In this case, they are cautious in making purchases in a bid to avoid risk, and mainly fulfill previous contracts or consume inventories. Thus, cottonseed trading is limited in spot market. It is expected that cottonseed market may keep range-bound in a near term but still stay relatively strong on the whole.

Oils: 

Summary: U.S. soybean futures retreated and corrected on Wednesday, but oils futures fluctuate to rise and expand gains on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes up 130-200 CNY/tonne and palm oil up 120-130 CNY/tonne, both in tepid trade.

Dalian oils futures again seize the uptrend today after short-term corrections, and spot soybean oil also passes the mark of 10,000 CNY. Fundamentals remain positive in domestic oils market. For one thing, Soybean vessels at Chinese ports are estimated at just 5.94 mln tonnes in February and forecast to be 6.20 mln tonnes in March, so that some crushers have made a plan for downtime in March and April. For another, domestic soybean oil stocks have fallen to less than 850,000 tonnes as millers are resuming the delivery with the end of the festival, and domestic palm oil stocks at ports and rapeseed oil stocks in coastal regions are also lower than this time in previous years. Funds are entering the market and the arbitrage of long oils positions and short meal positions are active. In the short term, the oils market is predicted to keep a strong trend.

Soybean oil: GB Grade I soybean oil is mainly priced at 9,880-10,120 CNY/tonne in domestic coastal areas, a rise of 130-200 CNY/tonne. (Tianjin traders 9880-9900; Rizhao traders 9950; Zhangjiagang traders 10120; and Guangzhou traders 10050-10100). 

Palm oil: RBD palm olein is mainly priced at 8,040-8,100 CNY/tonne in coastal areas, mostly up 120-130 CNY/tonne. (Tianjin traders 8100, up 120; Rizhao traders not available; Zhangjiagang traders 8060, up 120; Guangzhou traders 8040-8050, up 130; and Xiamen not available).

Rapeseed oil: U.S. soybean futures closed lower on Wednesday, but rapeseed oil futures open high and rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 130-160 CNY at 11,040-11,190 CNY/tonne in coastal regions in tepid trading.

China’s inventories of soybean oil, palm oil and rapeseed oil are all below the levels at this time in previous years, so the supply is not under pressure. And some domestic crushers will be in downtime periodically in March and April as Feb-Mar soybean arrivals at ports may be less than 12.2 mln tonnes. And net crush margins for imported U.S. soybeans are at loss on Dalian. And since the United States is propelling the $1.9 trillion stimulus package, the liquidity remain ample and the U.S. dollar outlook is bearish. These are lend bullish support to domestic oils market. Overall, rapeseed oil market is predicted to strengthen at the high level in the near term.

Cottonseed oil: Cottonseed oil prices decline by 100 CNY/tonne in several regions of China today. Downstream enterprises are wary of taking orders as the demand for cottonseed oil remains weak, pressuring its prices. U.S. soybean futures edge down overnight. But oils futures fluctuate to move up and extend further gains on Dalian Commodity Exchange today. In the cash market, soybean oil jumps 130-200 CNY/tonne and palm oil increases by 120-130 CNY/tonne. The oils remain bullish on fundamentals. Besides, soybean arrivals total only 5.94 mln toones in February and are forecast to be 6.2 mln tonne in March, making many crushing mills idled during the month of March and April. Likewise, soybean oil stocks have declined to less than 800,000 tonnes. And palm oil and rapeseed oil stockpiles are also lower than the corresponding period in former years. 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 cottonseed oil price. It is projected that cottonseed oil market will follow bulk oils to maintain a strong uptrend in a short term.

Sunflower oil: Sunflower oil prices are mostly stable and some mixed in China today. Grade I imported refined sunflower oil is offered at 11,800-12,600 CNY/tonne, and crude sunflower oil is offered at 11,600 CNY/tonne.

U.S. soybean futures retreated to correct on Wednesday, but Dalian futures fluctuate to expand gains today and spot soybean oil goes up 130-200 CNY and palm oil up 120-130 CNY/tonne. And sunflower oil import cost has been lifted as the reduction in Ukrainian sunflowerseed production has pushed higher prices. These are supporting sunflower oil market. But sunflower oil prices remain at such high levels that downstream buyers tend to use corn oil as a substitute, which is negative to the market. In the near term, sunflower oil market in China is predicted to fluctuate to strengthen.

Corn oil: Corn oil prices continue a rise in China today. Grade I corn oil price is 11,000-11,400 CNY/tonne, up 200 CNY/tonne. (Shandong 11,000-11,400 CNY; Hebei 11,000; Liaoning 11,200, up 200 CNY; and Sichuan 11,300); and crude corn oil is offered at 9,600-10,100 CNY/tonne, up 100 CNY. (Henan 9,600, up 100 CNY; Hebei 10,000-10,100; and Inner Mongolia 10,000).

The processing cost for corn oil remains high under high feedstock corn germ prices, so oil millers have strong sentiment to support prices. Moreover, Dalian oils futures are expanding gains today, and spot sunflower oil prices also keep firm, which are bullish to corn oil market. But downstream buyers tend to wait after corn oil prices increase to such high levels, which is negative to the market. Overall, short-term corn oil market is predicted to maintain a strong trend in China.

(USD $1=CNY ¥6.48)