Today (Mar 15), 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 0.02-0.08 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 in the short run.

Oils: 

Summary: U.S. soybean futures fractionally fell last Friday on higher projections for Brazilian soybean production. But oils futures fluctuate to rise on the arbitrage of long oils and short meals on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes up 60-140 CNY/tonne and palm oil up 30-80 CNY/tonne, both in thin trade.

Data by MPOB showed that Malaysian palm oil stockpiles in February drop 1.8% on month to 1.30 mln tonnes, well below analysts’ forecast of 1.42 mln tonnes, and its production hit a five-year low in February. These are bolstering oils futures. Meanwhile, domestic soybean crush fell 14% on week to 1.44 mln tonnes last week due to a lack of beans or swelling meal inventory, so that soybean oil stocks also further decline. Besides, domestic palm oil and rapeseed oil stocks are also not huge. With bullish fundamentals, oils market is predicted to keep its strength. But the market has been in thin trade as downstream buyers are inactive after oils prices increase to multi-year high, and the market confidence in going long in oils futures is also affected by sharp loss in domestic stock market, which may add to fluctuations in the market. Participants are suggested to strengthen risk aversion and keep light positions.

Soybean oil: GB Grade I soybean oil is mainly priced at 10,200-10,470 CNY/tonne in domestic coastal areas, a rise of 60-140 CNY/tonne. (Tianjin traders 10,280; Rizhao traders 10,200; Zhangjiagang traders 10,470; and Guangzhou traders 10,350-10,380). 

Palm oil: RBD palm olein is mainly priced at 8,480-8,560 CNY/tonne in coastal areas, mostly up 30-80  CNY/tonne. (Tianjin traders 8550-8560, up 60; Rizhao traders not available; Zhangjiagang traders 8480, up 30; Guangzhou traders 8500-8510, up 80; and Xiamen not available).

Rapeseed oil: U.S. soybean futures closed lower last Friday as Brazilian soybean production was revised upward by 1% to 135.1 mln tonnes and on the absence of Chinese buyers after the Chinese Lunar New Year in the U.S. soybean market. But rapeseed oil futures open high and rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 100-120 CNY at 11,270-11,470 CNY/tonne in coastal regions in thin trading.

China’s rapeseed oil stocks are 29% lower than this time last year, in spite of a rise to 221,600 tonnes at present. Besides, board net crush margins for imported U.S. soybeans and Canadian Canadian canola are both at loss. Besides, the liquidity is ample since the U.S. is propelling the $1.9 trillion stimulus package, so that funds are bullish about the commodity markets, especially in oils market that is under tightening inventories. These are lending support to domestic oils market. Rapeseed oil market in China is predicted to strengthen at the high level in the near term.

Cottonseed oil: Cottonseed oil prices are mixed by 100-200 CNY/tonne in China today. U.S. soybean futures edged lower on Friday on higher Brazilian soybean production estimate. But oils futures still fluctuate to rise on Dalian Commodity Exchange due to a large buying of oils. In the spot market, soybean oil climbs 60-140 CNY/tonne and palm oil increases by 30-80 CNY/tonne.

There will be a period of downtime for many soyoil mills due to shortages of soybeans or overhang of soybean meal. In this case, soybean crush has dropped by 14% weekly to a low level of 1.44 mln tonnes. And soybean oil stocks also further dwindle. Likewise, palm oil and rapeseed oil stockpiles are at a relatively low level. With supportive factors on fundamentals, oils market will maintain a strong uptrend. Besides, a majority of oil plants are idled for the moment, which boosts cottonseed oil price. But downstream buyers will be less tolerant as oils prices climb to a multi-year high. It is projected that cottonseed oil market will follow bulk oils to fluctuate at the high level in a short term but stay strong on the whole.

Sunflower oil: Sunflower oil prices steady with a rise in China today. Grade I imported refined sunflower oil is offered at 13,500-14,500 CNY/tonne; and crude sunflower oil at 13,300 CNY/tonne.

U.S. soybean futures slightly fell last Friday on a higher projection for Brazilian soybean production. Dalian oils futures fluctuate to rise on the arbitrage of long oils and short meals, and spot soybean oil goes up 60-140 CNY and palm oil mostly up 30-80 CNY. Besides, domestic soybean oil stocks are further lower and palm oil and rapeseed oil stocks are also not huge. Hence, the overall fundamentals remain bullish. In addition, 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. On the whole, sunflower oil market in China is predicted to keep its strength.

Corn oil: Corn oil prices are stable with a partial rise in China today. Grade I corn oil price is 12,500-13,000 CNY/tonne, a partial rise of 500 CNY. (Shandong 12,500-13,000 CNY, up 500; Hebei no offers; Liaoning 12,500; and Sichuan no offers); and crude corn oil is offered at 10,400-11,000 CNY/tonne, a partial rise of 100 CNY. (Henan 10,400; Hebei 10,900; and Inner Mongolia 10,500).

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 slightly fell last Friday on a higher projection for Brazilian soybean production, but Dalian oils futures fluctuate to rise on the arbitrage of long oils and short meals today. Spot soybean oil goes up 60-140 CNY and palm oil mostly up 30-80 CNY, and 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 ¥6.50)