Today (Mar 12), 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 decrease by 0.02-0.04 CNY/kg in several regions 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 in the short run.

Oils: 

Summary: U.S. soybean futures closed slightly higher on Thursday on an uncertain outlook in South American soybean production and as U.S. soyoil futures climbed 2% on tight supply in global vegetable oils. Oils futures also soar in morning session on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes up 50-100 CNY/tonne and palm oil up 110-130 CNY.

BMD palm oil futures rose for a seventh consecutive session to hit a 13-year fresh high, as Malaysian palm oil Feb-ending stockpiles reduced 1.8% month on month to 1.3 mln tonnes and international crude oil prices also rose. Hence, Dalian oils futures are bolstered to seize the uptrend again. Besides, China’s soybean crush has been at a low level recently for a lack of beans in some mills, and the crush is less than 1.45 mln tonnes this week, well below the normal level of 1.8 mln tonnes, so soybean oil stocks may further decline. In addition, the African swine fever is being reported in some provinces. Hence, traders are active in arbitraging in long oils and short meals. The overall fundamentals are still bullish. But in the context of a volatile financial market, Dalian oils futures also fluctuate fiercely so that gains are narrowing down after sharp gains in early trade. Short-term oils market may fluctuate frequently in the short term, and participants are suggested to remain cautious and keep light stockpiles.

Soybean oil: GB Grade I soybean oil is mainly priced at 10,200-10,400 CNY/tonne in domestic coastal areas, a rise of 50-100 CNY/tonne. (Tianjin traders 10,250; Rizhao traders 10,200; Zhangjiagang traders 10,370-10,400; and Guangzhou traders 10,320-10,370). 

Palm oil: RBD palm olein is mainly priced at 8,450-8,550 CNY/tonne in coastal areas, mostly up 110-130 CNY/tonne. (Tianjin traders 8520-8550, up 110; Rizhao traders not available; Zhangjiagang traders 8480-8520, up 120; Guangzhou traders 8450-8480, up 130; and Xiamen not available).

Rapeseed oil: U.S. soybean futures rose on Thursday, but rapeseed oil futures move lower after high opens on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle down 10 CNY at 11,150-11,370 CNY/tonne in coastal regions in thin trading.

Rapeseed oil price is tied down by the consumption as the demand is slack after the festival and also due to its big price spread with soybean oil and palm oil. But the overall fundamentals maintain in China’s oils market: 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. The volatile financial market has dampened the market confidence, so rapeseed oil market is expected to follow futures to fluctuate and adjust at the high level in the short term, but keep its strong pattern on the whole.

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 12,500 CNY/tonne, a partial rise of 200 CNY. (Shandong 12,500 CNY; Hebei no offers; Liaoning 12,500, up 200; and Sichuan no offers); and crude corn oil is offered at 10,400-10,900 CNY/tonne, a partial rise of 500 CNY. (Henan 10,400; Hebei 10,900; and Inner Mongolia 10,500, up 500).

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. And U.S. soybean futures rose on Thursday alongside a 2% tick in U.S. soyoil, and Dalian oils futures also soar today. In addition, sunflower oil prices also keep rising. These 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)