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Daily Review on Markets for Oilseeds and Oils in China--4/27/2021


Today (Apr 27), 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 part increase by 0.02-0.04 CNY/kg in China 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. This has offered a support to cottonseed market. But due to pricey cottonseed and persistent 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. Bulk oils stop declining and rebound today, and cottonseed price may keep strengthening with fluctuations in the near term.




Summary: U.S. soybean futures extended sharp rises on tight domestic supplies and as Argentina was mulling on hiking export tax. Oils futures rally on China’s Dalian Commodity Exchange today, and spot soybean oil goes up 50-110 CNY and palm oil up 100-140 CNY/tonne.


The loss in imported soybean crush is bigger in the wake of sharp gains in U.S. soybeans, and nearby U.S. soyoil contract hit the limit-up driven by the concept of biodiesel. As Indonesia will raise export tax in May, Chinese importers will have to pay more for nearby cargoes. And a stronger trend in international vegetable oils is also bringing price comparison effect to domestic oils. Besides, inventories of soybean oil and palm oil in China are at lows this time in years. Hence, domestic millers are supporting prices amid positive fundamentals, thus bolstering the oils market to rally. However, global market is concerned about the demand from top buyer India as the pandemic is severe in this country. Moreover, domestic millers are picking up operation rates and weekly crush returns to a normal level of 1.80 mln tonnes, so that soybean oil stocks also start to rise slightly. In addition, China will continue to auction rapeseed oil on Tuesday. These will also add to fluctuations in the market. Overall, the market is predicted to keep its strength.


Soybean oil: GB Grade I soybean oil is offered at 9,380-9,650 CNY/tonne in domestic coastal areas, partially up 50-80 CNY/tonne. (Tianjin trader 9530-9580; Rizhao trader 9580; Zhangjiagang trader 9630-9650; and Guangzhou trader 9380). 


Palm oil: RBD palm olein is mainly priced at 8,290-8,460 CNY/tonne in coastal areas, mostly up 100-140 CNY/tonne. (Tianjin trader 8460, up 100; Rizhao trader 8420; Zhangjiagang trader 8360, up 140; Guangzhou trader 8290-8310, up 100; and Xiamen no offer).


Rapeseed oil: U.S. soybean futures sharply rose on Monday, and rapeseed oil futures stay above the previous close in spite of loss on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil price is offered higher by 40-120 CNY at 11,130-11,370 CNY/tonne, in thin trade.


Crush margins for soybean and rapeseed are at heavy loss, and domestic millers may purchase smaller-than-expected quantities of rapeseed in June-August; hence, rapeseed oil prices are strong overall. But soybean vessels from South America are arriving at domestic ports, and domestic soybean crush is expected to exceed 1.80 mln tonnes this week. And last week, domestic rapeseed oil rose 7% to 245,000 tonnes, and commercial soybean oil stocks also rose 3.2% to 590,000 tonnes. Besides, the consumption on rapeseed oil is also affected by its huge price spread with soybean oil and palm oil. Therefore, rapeseed oil prices will fluctuate frequently at high levels.


Cottonseed oil: Cottonseed oil prices in China stay stable with a partial decrease of 100 CNY/tonne today. Crushing mills mostly fulfill previous contracts due to current sluggish demand for cottonseed oil. And cottonseed oil is offered higher and traded lower, in subdued trade. But CBOT soybean futures continued soaring on Monday on tightening supply of US soybeans and Argentina’s plan on raising export taxes. Spot oils market stops falling and take a rally today. Among them, soybean oil increases by 50-110 CNY/tonne and palm oil represents an advance of 100-140 CNY/tonne. Crush margins for imported soybean futures continue to be negative on China’s Dalian exchange after a steep rise in US soybeans. Hence, oils remain bullish on fundamentals. And many oil plants tend to raise price, which buoys bulk oils market. It is expected that short-term cottonseed oil price may follow bulk oils to fluctuate to go strengthening.


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.


Global market is concerned about the demand from top buyer India as the pandemic is severe in this country. Moreover, domestic millers are picking up operation rates and weekly crush returns to a normal level of 1.80 mln tonnes, so that soybean oil stocks also start to rise slightly. And more domestic downstream buyers choose corn oil as a substitute, which is also negative to sunflower oil market. However, crush margins for imported soybeans on Dalian board are negative in the wake of sharp rises in U.S. soybeans, so domestic millers are supporting prices. 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.


Corn oil: Corn oil prices are stable with a partial decline 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 11,300); and crude corn oil is offered at 9,700-10,100 CNY/tonne, down 200 CNY. (Henan 10,100; Hebei 9,700-10,000; Inner Mongolia 9,800, down 200; 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)