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Daily Review on Markets for Oilseeds and Oils in China--4/13/2021


Today (Apr 13), the market for oilseeds and oils in China is shown as follows:




Imported soybean: Imported soybean stocks are ample at domestic ports now, and China’s monthly soybean arrivals at ports are forecast to hit 10 mln tonnes in May-July, for Brazilian producers are harvesting and selling soybeans at a brisker pace. These are negative to imported soybean market in China. But the market demand has picked up as downstream buyers have consumed stocks and are making replenishment. This is lending support to the market. Overall, imported soybean market in China is predicted to fluctuate in the short run, and participants can keep an eye on imported soybean arrivals and demand in China.


Cottonseed: Cottonseed prices in China mostly keep unchanged and partly increase by 0.08 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. 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, and traders tend to dampen the price. Therefore, it is expected that short-term cottonseed price still keeps fluctuating.




Summary: U.S. soybean futures continued a downtrend on Monday following a sharp decline in soyoil futures, pressured by bearish data about Malaysian palm oil inventory. And oils futures keep declining on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil fluctuates by 10-100 CNY/tonne, and palm oil mostly down by 10-60 CNY, both in thin trade.


The cost support for domestic soybean oil weakens as U.S. soybean futures fall below the 1,400 cents mark. Southeast Asian producers will also see a seasonal rise in palm oil output, and a latest MPOB report shows that Malaysian March palm oil production and stocks are well above the forecast. And China’s soybean arrivals will reach 27 mln tonnes from April to June. These combine to tie down domestic oils prices to decline and adjust. However, China’s soybean oil stocks were further lower by 5% to 590,000 tonnes as the crush further fell by 12% to 1.36 mln tonnes last week, and edible palm oil stocks at ports and rapeseed oil stocks are both lower than this time in previous years. Moreover, crush margins for imported soybeans on Dalian are at heavy loss at present. Hence, fundamentals are still bullish in the oils market, which helps limit the decline in the oils market. Dalian oils futures gradually pare losses after testing low today, of which soybean oil futures post gains in afternoon trade. Overall, short-term spot oils prices may bounce moderately, but the upward momentum will also be limited, so the market will fluctuate frequently. Buyers are suggested to make replenishment in small batch on the dips, remain cautious in chasing after higher price and keep light stockpiles.


Soybean oil: GB Grade I soybean oil is offered at 9,100-9,270 CNY/tonne in domestic coastal areas, mostly fluctuating and mixed by 10-100 CNY/tonne. (Tianjin trader 9150; Rizhao trader 9100; Zhangjiagang trader 9270; and Guangzhou trader 9170). 


Palm oil: RBD palm olein is mainly priced at 7,590-7,790 CNY/tonne in coastal areas, steadily fluctuating by 10-20 CNY/tonne. (Tianjin trader 7790, flat; Rizhao trader 7730; Zhangjiagang trader 7670, down 10; Guangzhou trader 7590-7610, down 20; and Xiamen no offer).


Rapeseed oil: U.S. soybean futures fell on Monday, led lower by the soyoil market's decline to its lowest in nearly six weeks on bearish data about palm oil supplies. But rapeseed oil futures fluctuate to rise on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices goes up 40-50 CNY to 10,870-11,090 CNY/tonne in coastal regions in thin trading.


Last week, China’s rapeseed oil stocks fell 7% to 230,000 tonnes, soybean oil stocks down 4.8% to 590,000 tonnes, and palm oil stocks also at a low level against this time in previous years; hence, domestic oils supplies are not under pressure. In addition, crush margins for soybeans and rapeseed are at heavy loss on board. Bullish fundamentals thus bolster rapeseed oil market to strengthen. Hence, short-term rapeseed oil market is predicted to fluctuate and strengthen at the high level. But China’s soybean arrivals are expected to reach 27 mln tonnes in April-June, as Brazilian producers are marketing soybeans at a brisker pace. And Southeast Asian producers will also see a seasonal rise in palm oil output. Therefore, rapeseed oil prices will fluctuate frequently at the high level.


Cottonseed oil: Cottonseed oil prices mainly keep steady and partly drop by 50-300 CNY/tonne in China today. Weighed down by Malaysian palm oil stockpile report, oils further dip on China’s Dalian Commodity Exchange. Palm oil mostly decreases by 10-60 CNY/tonne in the cash market. At present, cottonseed oil is offered higher but traded lower due to sluggish demand, in subdued trade. But some soyoil mills are idled by soybean shortages or surplus soybean meal, so operation rates remain at a low level. Besides, crush margins for imported soybean futures on Dalian exchange are pretty negative now, and bulk oils remain bullish on fundamentals. It is predicted that short-term cottonseed oil market may follow bulk oils to fluctuate.


Sunflower oil: Sunflower oil prices steady with a partial decline in China today. Grade I imported refined sunflower oil is offered at 13,000-14,300 CNY/tonne; and crude sunflower oil is not offered.


U.S. soybean futures prices fell below the 1,400 cents mark as South American soybeans are flooding into the market and on a bearish USDA monthly report, and this is going to weaken the cost support for soybean oil in China. And more downstream buyers choose corn oil as a substitute, which is also negative to sunflower oil market. But crush margins for imported soybeans on Dalian are at heavy loss at present. Hence, fundamentals are still bullish in the oils market, which is lending support to sunflower oil market. On the whole, short-term sunflower oil market is predicted to fluctuate at the high level in the short term.


Corn oil: Corn oil prices are steady with a partial decline in China today. Grade I corn oil is 11,500-11,800 CNY/tonne. (Shandong 11,500-11,800 CNY; Hebei no offer; Liaoning 11,300; and Sichuan 11,500); and crude corn oil is offered at 9,500-10,100 CNY/tonne, down 100 CNY. (Henan 10,100, down 100; Hebei 9,800-10,000; Inner Mongolia 9,800; 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. But corn germ prices are still at high levels, and sunflower oil, the rival of corn oil, also sees a decline in price under pressure. These may bring some bullish sentiment to the market. Overall, corn oil market in China is predicted to fluctuate to downside in the near term.


(USD $1=CNY ¥6.55)