Today (Mar 16), 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 decrease by 0.02-0.04 CNY/kg in some regions of China 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, and cottonseed market will stay strong on the whole.

Oils: 

Summary: U.S. soybean futures closed with gains on Monday as Brazilian soybean crops were only 46% harvested, lower than the 59% a year earlier and the slowest pace since 2010/11. Soybean oil futures extend gains on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil and palm oil go up 20-70 CNY/tonne, both in thin trade.

Malaysian palm oil stocks drop to a nearly five-year low and India is to expand edible oils imports ahead of the Eid al-Adha, although SGS data showed that palm oil exports went down 1% on month to 549,273 tonnes in the first half of March; hence, BMD palm oil futures still stayed high. In addition, domestic soybean crush fell 14% on week to 1.44 mln tonnes last week due to soybean shortages and swelling meal inventory, so that soybean oil stocks also further declined nearly 10% further to 740,000 tonnes. Meanwhile, domestic palm oil stocks also fell 6.5% on week to 560,000 tonnes, and rapeseed oil stocks are also small. Besides, traders are active in increasing long positions in oils, as meal prices are weak due to reports of the African swine fever. Domestic soybean oil market stays a strong trend on the whole, but has slowed down rises. Participants are suggested to watch out for fluctuations as funds may seek aversion on high levels, and keep light stockpiles.

Soybean oil: GB Grade I soybean oil is mainly priced at 10,300-10,450 CNY/tonne in domestic coastal areas, mostly up 20-70 CNY/tonne but also a partial decline of 70 CNY. (Tianjin traders 10,320-10,350; Rizhao traders 10,300; Zhangjiagang traders 10,470; and Guangzhou traders 10,420-10,450). 

Palm oil: RBD palm olein is mainly priced at 8,480-8,620 CNY/tonne in coastal areas, mostly up 30-70 CNY/tonne. (Tianjin traders 8590-8620, up 70; Rizhao traders not available; Zhangjiagang traders 8480, up 30; Guangzhou traders 8540, up 70; and Xiamen not available).

Rapeseed oil: U.S. soybean futures closed higher as rains continued delaying soybean harvests in Brazil. Rapeseed oil futures open high and rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle up 40-50 CNY at 11,160-11,530 CNY/tonne in coastal regions in thin trading.

China’s rapeseed oil stocks are 29% lower on year at 221,600 tonnes, soybean oil stocks at 748,200 tonnes (down 10% on week), and palm oil stocks at 560,300 tonnes (down 6.5% on week), so the overall oils market is not under supply pressure. And some domestic crushers will suspend production periodically in March and April for a lack of beans. Supported by bullish factors, domestic millers have strong sentiment to raise prices. In addition, net crush margins for imported U.S. soybeans are at loss on Dalian. And domestic traders are active in long oils positions as meal prices are weak due to the reports of the African swine fever. Overall, rapeseed oil market is predicted to strengthen at the high level in the near term.

Cottonseed oil: Cottonseed oil prices partly fluctuate by 50-100 CNY/tonne in China today. U.S. soybean futures closed up on Monday. Dalian soybean oil futures further rise today. In the spot market, soybean oil and palm oil increases by 20-70 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 by nearly 10% to around 740,000 tonnes. Likewise, palm oil stockpiles are 6.5% lower at 560,000 tonnes, and rapeseed oil stocks also stay 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 it should be noted that downstream buyers will be inactive after oils prices climb to a multi-year high. Market participants should keep close eyes on the risk of fluctuation at the high level in the short run.

Sunflower oil: Sunflower oil prices steady and some mixed in China today. Grade I imported refined sunflower oil is offered at 13,500-14,300 CNY/tonne; and crude sunflower oil id not offered.

U.S. soybean futures closed higher on Monday, as Brazilian farmers just harvested 46% of their soybeans under rains, lower than the 59% a year earlier and the slowest pace since 2010/11. Dalian soybean oil futures continue gains today, and spot palm oil and soybean oil go up 20-70 CNY/tonne. In addition, smaller sunflowerseed harvests in Ukraine lead to tensions in sunflower oil supplies and thus to a rise in import cost. But sunflower oil prices stay at the high level, so that downstream buyers also tend to choose corn oil as a substitute, which is bearish to the market. On the whole, sunflower oil market in China is predicted to keep its strength.

Corn oil: Corn oil prices are stable in China today. Grade I corn oil price is 12,500-13,000 CNY/tonne. (Shandong 12,500-13,000 CNY; Hebei no offers; Liaoning 12,500; and Sichuan no offers); and crude corn oil is offered at 10,400-11,000 CNY/tonne. (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 domestic sunflower oil prices also stay at the high level. 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)