Today (Mar 11), 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 decrease by 0.02-0.04 CNY/kg today. 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. 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. Underpinned by tight supply of cottonseed, the downside for its market will be restricted.

Oils: 

Summary: U.S. soybean futures fell on Wednesday on profit-booking as Brazilian soybean exports might hit a record high in March and for a lack of fresh news of Chinese purchases of U.S. soybeans. And on China’s Dalian Commodity Exchange today, soybean oil futures decline widely and palm olein actually stays below the previous close in spite of gains. In the spot markets, soybean oil goes down 90-170 CNY/tonne and palm oil down 20-40 CNY, both in thin trade.

Statistics from a shipping agency illustrated that Malaysian palm oil export continued a 22% month-on-month decline in the first ten days of March, thus triggering concerns over the demand and weighing on the oils market. But the scarcity of soybeans will make some processors suspend the crush periodically, and domestic soybean oil stocks have fallen further to 830,000 tonnes at present. And high U.S. soybean prices still keep net theoretical crush margins for imported soybeans at the negative territory on Dalian. This round of sharp decline is mainly driven by the outflow of funds brought by the volatile financial market, alongside technical overbuying in the wake of sharp gains and concerns over over high-level prices. Short-term soybean oil market is expected to follow futures to fluctuate and adjust in China, and it can not be said that the market has hit the ceiling. Participants are suggested to remain cautious and keep light stockpiles. Following bounces in China’s stock market today, Dalian oils futures have erased half of the early losses, and participants can wait to see whether oils futures will slow down their losses in the wake of sharp losses in soybean meal.

Soybean oil: GB Grade I soybean oil is mainly priced at 10,100-10,300 CNY/tonne in domestic coastal areas, a decline of 90-170 CNY/tonne. (Tianjin traders 10,120; Rizhao traders 10,100; Zhangjiagang traders 10,300; and Guangzhou traders 10,120-10,170). 

Palm oil: RBD palm olein is mainly priced at 8,250-8,350 CNY/tonne in coastal areas, mostly down 20-40 CNY/tonne. (Tianjin traders 8340-8350, down 30; Rizhao traders not available; Zhangjiagang traders 8290, down 20; Guangzhou traders 8250-8270, down 40; and Xiamen not available).

Rapeseed oil: U.S. soybean futures fell on Wednesday, and rapeseed oil futures open low and decline on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle down 150-160 CNY at 11,160-11,380 CNY/tonne in coastal regions in thin trading.

Funds show strong sentiment to take profits under volatile macro-financial factors in the wake of consecutive, sharp losses in China’s stock market, thus weighing on domestic spot rapeseed oil move. But there is no pressure in domestic oils supplies, as inventories of soybean oil, palm oil and rapeseed oil are all lower at this time in previous years and some soybean crushers will be in downtime for a lack of beans in March and April. Add to that, net crush margins for imported U.S. soybeans are at loss on Dalian. Besides, bullish fundamentals in China and quantitative easing monetary policy in the United States will also be positive to rapeseed oil market. Rapeseed oil is predicted to follow futures to fluctuate and adjust in the short term and stay high on the whole. As Zhengzhou rapeseed oil futures are in stronger fluctuations, buyers can wait and keep light positions.

Cottonseed oil: Cottonseed oil prices mainly stand firm with a partial fluctuation of 100-200 CNY/tonne in China today. U.S. soybean futures plunged on Wednesday on profit taking. Soybean oil futures stage a sharp pullback on Dalian Commodity Exchange today. In the cash market, soybean oil dips by 90-170 CNY/tonne and palm oil declines by 20-40 CNY/tonne. Factories mainly fulfill the previous contracts as market demand for cottonseed oil is sluggish now, seeing few new orders. This weighs on cottonseed oil price. But there will be a period of downtime for many soyoil mills due to shortages of soybeans. As of now, soybean oil stocks have further dropped to 830,000 tonnes. Besides, theoretic net crush margins for imported soybean futures are at huge losses on Dalian, which leads oils market to still stay strong on fundamentals. Moreover, a majority of oil plants have yet to resume the operation, which boosts cottonseed oil price. It is projected that short-term cottonseed oil market will follow bulk oils to fluctuate to fall from 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.

Boosted by tightening oils supplies in China and the fact that net theoretical crush margins for imported soybeans are at heavy loss on Dalian due to high U.S. soybean prices, the oils market continues to keep its strength. Smaller sunflowerseed harvests in Ukraine lead to tensions in sunflower oil supplies and thus to a rise in import cost. These are bolstering sunflower oil prices. But Dalian soybean oil futures decline widely today, and spot soybean oil goes down 90-170 CNY/tonne and palm oil down 20-40 CNY, which is bearish to sunflower oil market. In the short term, sunflower oil market in China is predicted to fluctuate to strengthen.

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 300 CNY. (Shandong 12,500 CNY; Hebei no offers; Liaoning 12,300, up 300; and Sichuan no offers); and crude corn oil is offered at 10,000-10,900 CNY/tonne, a partial rise of 300-400 CNY. (Henan 10,400, up 300; Hebei 10,900, up 400; and Inner Mongolia 10,000).

As high corn germ prices keep processing cost at a high level and also due to tight feedstock, the market has strong sentiment to support prices. U.S. soybean futures continued gains on Monday, and sunflower oil prices also keep going upward, 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 ¥6.50)