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Daily Review on Markets for Oilseeds and Oils in China--4/25/2021


Today (Apr 25), the market for oilseeds and oils in China is shown as follows:




Imported soybean: China may bring in 27 mln tonnes of soybeans from April to June, as Brazil is now marketing and exporting soybeans at a brisker pace. And domestic downstream buyers inactive in purchase due to declining prices, so that the demand for imported soybeans is not strong and port shipments also remain tepid. These are negative to domestic imported soybean market. However, high-level U.S. soybean prices are lending support to the cost side for imported soybeans. In a hybrid of the bull and the bear, imported soybean market in China is predicted to fluctuate with a weakening trend in the short run.


Cottonseed: Cottonseed prices in China mostly increase by 0.01-0.06 CNY/kg today. Cottonseed production this year has been lower than the previous year. And ginning factories in Xinjiang are mostly shut down, seeing limited availability for cottonseed in market. Besides, oils and meals are both increasing, which leads cottonseed market to stand steady with an advance. This has offered a support to cottonseed market. But due to pricey cottonseed and consecutive losses in crush margins, oil plants 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. Therefore, affected by an ascent in both oils and meals, cottonseed price is predicted to fluctuate at the high level in the near term.




Summary: U.S. soybean futures closed firm on Friday on tightening U.S. soybean supplies and intense competence for spring planting acreage and as the cold weather in the U.S. Midwest was unfavorable to fieldwork, coupled with renewed concerns over the inflation under a weak U.S. dollar. Oils futures retreated in Friday’s after-hour trade on China’s Dalian Commodity Exchange, which is closed on Sunday today. In the spot markets, soybean oil and palm oil prices are mostly not offered, some mixed by a decline of 50-80 CNY or a rise of 50 CNY, both in thin trade.


India-the top buyer of oils, lost control of the COVID-19 pandemic, so that BMD palm oil futures retreated on Friday on concerns over the demand. China will auction 18604 tonnes of Grade 4 rapeseed oil on April 27. These are negative to domestic oils market, so that there are short-term fluctuations and adjustments after continued rallies. However, domestic soybean oil and palm oil inventories are at lows this time in years, and crush margins for imported soybeans on Dalian board are at loss due to rallying U.S. soybean futures. Hence, domestic millers still have sentiment to support prices under bullish fundamentals. Short-term oils market will have little downside space and may remain strong overall. Buyers can keep light stockpiles.


Soybean oil: Soybean oil prices are mostly not offered on Sunday today, and GB Grade I soybean oil is at 9,420-9,650 CNY/tonne in domestic coastal areas, mixed by a decline of 80-90 CNY and a rise of 50 CNY. (Tianjin trader 9600-9620; Rizhao trader 9650; Zhangjiagang trader no offer; and Guangzhou trader 9420). 


Palm oil: RBD palm olein are mostly not offered on Sunday today and offered at 8,400-8,580 CNY/tonne, a decline of 50 CNY/tonne. (Tianjin trader 8580-8600, down 50; Rizhao trader no offer; Zhangjiagang trader no offer; Guangzhou trader 8400, down 50; and Xiamen no offer).


Rapeseed oil: U.S. soybean futures firmed on Friday, but rapeseed oil futures fell in Friday’s after-hour trade on China’s Zhengzhou Commodity Exchange today, which is closed on Sunday today. Spot rapeseed oil prices are mostly not offered during the weekend.


The consumption on rapeseed oil is also affected by its huge price spread with soybean oil and palm oil, so rapeseed oil stocks rose 3% to 34,000 tonnes in coastal China as of this Friday. Besides, China may bring in 10.7 mln tonnes of soybeans in May as soybean shipments speed up in Brazil, and domestic soybean crush also rose 10% to 1.779 mln tonnes this week. These are weighing on domestic oils market. But due to heavy loss in rapeseed crush, domestic millers may purchase smaller-than-expected quantities of rapeseed in June-August, so the decline in rapeseed oil price is not sharp. Overall, short-term rapeseed oil market is predicted to fluctuate and adjust at the high level, and buyers can keep light stockpiles.


Cottonseed oil: Cottonseed oil prices in China stay stable with a partial increase of 400 CNY/tonne today. U.S. soybean prices skyrocket on short covering and large buying trigged by concerns over global tight supply. Crush margins for imported soybean futures continue to be negative on China’s Dalian exchange after steep rises in US soybeans, raising crushers’ intention in lifting price, and thereby offering a support to domestic oils market. For the moment, cottonseed oil is offered higher and traded lower due to bleak demand, in subdued trade. Dominated by supportive factors, bulk oils take an uninterrupted rise. Hence, short-term cottonseed oil market will also fluctuate to stay strong.


Sunflower oil: Sunflower oil prices steady with a partial decline in China today. Grade I imported refined sunflower oil is offered at 11,900-14,300 CNY/tonne; and crude sunflower oil is not offered.


China will see more soybeans arriving at ports amid ongoing marketing season in South America, and Chinese crushers will continue picking up operation rates in coming two weeks. Add to that, palm oil output in main producing countries will increase in the second quarter. These together weigh on short-term oils prices. Moreover, more downstream buyers choose corn oil as a substitute, which is also negative to sunflower oil market. But fundamentals remain bullish in domestic oils market,as inventories of soybean oil and palm oil are lows this time in years. In addition, the cost of importing sunflower oil is also lifted by a rise in Ukrainian sunflower oil prices. Overall, short-term sunflower oil market is predicted to fluctuate at the high level in the short term.


Corn oil: Corn oil prices are mostly stable and some down in China today. Grade I corn oil is 11,000-11,500 CNY/tonne. (Shandong 11,000-11,600 CNY; Hebei 10,700; Liaoning 11,300; and Sichuan no offer); and crude corn oil is offered at 9,700-10,100 CNY/tonne, down 100 CNY. (Henan 10,100; Hebei 9,700-10,000, down 100; Inner Mongolia 10,000; and Heilongjiang no offer).


Downstream purchasers are acting with caution and keep themselves to sidelines since corn oil prices have climbed to a high level, so that spot corn oil prices are declining. Besides, the slack season for oils now is also affecting spot prices, and sunflower oil, the rival of corn oil, also sees a decline in price under pressure. But corn germ prices are rising, thus lending support to the cost side. This may bring some support to corn oil market. Overall, corn oil market in China is predicted to fluctuate to downside in the near term.


(USD $1=CNY ¥6.49)