Today (Mar 10), the market for oilseeds and oils in China is shown as follows:

Oilseeds:

Imported soybean: Imported soybean supply keeps increasing at domestic ports, but the market demand is tepid and downstream buyers are not active, so holders are weak in hiking prices. But U.S. soybean futures remain strong on slow soybean harvests in Brazil under unfavorable weather conditions, so that domestic import cost keep climbing, which is supporting imported soybean market. 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 increase by 0.02-0.05 CNY/kg 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. Driven by supportive factors, it is expected that cottonseed market still stay relatively strong on the whole.

Oils: 

Summary: The USDA in its monthly supply/demand report maintained U.S. soybean ending stocks at 120 mln bushels, which was above the market forecast but still the lowest in 7 years. U.S. soybean futures rallied on Tuesday on tight U.S. soybean supplies and on concerns over weather in South America. Oils futures decline on China’s Dalian Commodity Exchange today, but palm olein futures actually stay above the previous close. In the spot markets, soybean oil goes down 30-50 CNY and palm oil up 30-50 CNY/tonne, both in thin trade.

Dalian oils futures are in correction after rushing higher, as funds show strong sentiment to take profits  under volatile macro-financial factors in the wake of consecutive, sharp losses in stock market. But data from MPOB showed that Malaysian crude palm oil production fell 1.85% on month to 1.106 mln tonnes in February and stocks declined 1.8% to 1.30 mln tonnes, of which stocks were lower than the market forecast of 1.40-1.42 mln tonnes. That is why palm olein futures remain resilient. In addition, China’s soybean crush is lower due to small soybean imports in February and March, and the overall oil stocks are also tight at present. And net crush margins for imported soybeans see heavy loss on Dalian as U.S. soybean prices keep growing, which is leading strong support to oils market. In the short run, domestic soybean oil market is predicted to follow futures to fluctuate and adjust at the high level.

Soybean oil: GB Grade I soybean oil is mainly priced at 10,380-10,600 CNY/tonne in domestic coastal areas, a rise of 80-110 CNY/tonne. (Tianjin traders 10,380-10,410; Rizhao traders 10,350; Zhangjiagang traders 10,600; and Guangzhou traders 10,450-10,500). 

Palm oil: RBD palm olein is mainly priced at 8,340-8,440 CNY/tonne in coastal areas, mostly up 60 CNY/tonne. (Tianjin traders 8,440, up 60; Rizhao traders not available; Zhangjiagang traders 8,370, up 60; Guangzhou traders 8,340-8,390, up 60; and Xiamen not available).

Rapeseed oil: U.S. soybean futures rose on Tuesday, and rapeseed oil futures continue rising on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 150 CNY at 11,600-11,830 CNY/tonne in coastal regions in tepid trading.

Due to tight supply of old rapeseed in Canada, crush margins for rapeseed are negative in China, thus affecting processors’ decision on buying vessels. Domestic oils supplies are not under pressure, as rapeseed oil stocks fell 10% to 169,000 tonnes last week, soybean oil stocks have fallen 2% weekly further to 830,000 tonnes now, and domestic palm oil stocks at ports are also lower than this time in previous years. Meanwhile, U.S. Senate has passed the $1.9 trillion stimulus package, so the global liquidity is ample and funds are bullish about the commodity market, especially in oils of tightening inventories. These are supporting the oils market in China. The overall rapeseed oil market is predicted to strengthen at the high level, but stock market has been declining for several sessions, so it is necessary to keep an eye on volatile macro factors.

Cottonseed oil: Cottonseed oil prices mainly stand firm with a partial fluctuation of 100-300 CNY/tonne in China today. The oils remain relatively bullish on fundamentals for the moment. Soybean crush during the month of February and March stays at a low level due to lower imports. At the moment, oils stockpiles get tightened. Besides, net crush margins for imported soybean futures are at huge losses on Dalian amid uninterrupted rises in U.S. soybean price, which leads oils market to still stay strong. Moreover, a majority of oil plants have yet to resume the operation, which boosts cottonseed oil price. But oils futures dip on Dalian Commodity Exchange today, and spot soybean oil goes down by 30-50 CNY/tonne. In addition, factories mainly fulfill the previous contracts as market demand for cottonseed oil is sluggish now, seeing a light trade. This also curbs cottonseed oil price. It is projected that cottonseed oil market will follow bulk oils to fluctuate at the high level.

Sunflower oil: Sunflower oil prices steady and some mixed in China today. Grade I imported refined sunflower oil is offered at 13,000-14,000 CNY/tonne; and crude sunflower oil at 12,800 CNY/tonne.

Net crush margins for imported soybeans see heavy loss on Dalian as U.S. soybean prices keep growing, which is leading strong support to oils market. In addition, sunflower oil import cost has been lifted as the reduction in Ukrainian sunflowerseed production has pushed higher prices. This is supporting sunflower oil prices. But sunflower oil prices are at high levels compared to this time in previous years, so that downstream buyers also tend to choose corn oil as a substitute. This is bearish to the market. On the whole, sunflower oil market in China is predicted to keep a strong trend.

Corn oil: Corn oil prices continue rising in China today. Grade I corn oil price is 11,500-12,500 CNY/tonne, a partial rise of 500 CNY. (Shandong 12,500 CNY; Hebei no offers; Liaoning 12,000, up 500; and Sichuan no offers); and crude corn oil is offered at 10,000-10,500 CNY/tonne. (Henan 10,100; Hebei 10,500; and Inner Mongolia 10,000).

The processing cost for corn oil remains high under high feedstock corn germ prices, and corn germ is in tight supplies, so oil millers have strong sentiment to support prices. U.S. soybean futures continued gains on Monday, and sunflower oil prices also keep firm, which is 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 ¥6.51)