Today (Mar 3), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: Domestic port soybean supply is increasing as cargoes from non-major producing countries are arriving at ports, whilst the market is in tepid trade, which are constraining the imported soybean market in China. But the overall port supply remains small at present. And the cost of importing soybeans stays stubbornly high as U.S. soybean prices are strong amid a slow crop harvest in Brazil. 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 fluctuate by 0.01-0.02 CNY/kg in several regions today. 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. However, cottonseed crushing mills keep facing losses as cottonseed price remains too high. Besides, a few operative factories mainly consume their stocks now. In this case, cottonseed trading is light in market. It is expected that cottonseed market may keep range-bound in a near term but still stay relatively strong on the whole.
Oils:
Summary: U.S. soybean futures surged on Tuesday on strong export demand for U.S. soybeans, hot and dry weather in Argentina and a soybean harvest delay under rainy weather in Brazil. But oils futures continue losses on China’s Dalian Commodity Exchange today. In the spot markets, soybean oil goes down 10-80 CNY/tonne and palm oil down 70-80 CNY. The market is attracting some low-level purchases, but tepid at high levels.
Malaysian palm oil exports were down 4.6%-6.5% month on month to 1.0-1.5 mln tonnes in February, whilst February production captured a rise. And domestic funds show higher risk aversion sentiment after consecutive sharp gains. These are weighing on Dalian oils futures. But domestic soybean oil stocks declined by 3% weekly to less than 850,000 tonnes as soybean crush did not pick up much last week and soybean oil delivery is recovering with the end of the festival. And as China’s soybean imports are forecast to be only 95 vessels or 6.20 mln tonnes in March, some mills will suspend production for a lack of beans in March and April. Meanwhile, port palm oil and rapeseed oil stocks in coastal China are also lower than that at this time in previous years. Moreover, the U.S. is propelling the $1.9 trillion coronavirus package, so liquidity remains ample. Hence, the round of decline is seen as a normal phase after sharp gains, and the oils market is predicted to stay strong.
Soybean oil: GB Grade I soybean oil is mainly priced at 9,620-9,870 CNY/tonne in domestic coastal areas, a decline of 10-80 CNY/tonne. (Tianjin traders 9620-9640; Rizhao traders 9720; Zhangjiagang traders 9840; and Guangzhou traders 9820-9870).
Palm oil: RBD palm olein is mainly priced at 7,860-7,950 CNY/tonne in coastal areas, mostly down 70-80 CNY/tonne. (Tianjin traders 7910-7940, down 70; Rizhao traders 7950, down 70; Zhangjiagang traders 7870, down 70; Guangzhou traders 7860-7870, down 80; and Xiamen not available).
Rapeseed oil: U.S. soybean futures closed higher on Tuesday, but rapeseed oil futures fluctuate to decline on China’s Zhengzhou Commodity Exchange today. Spot rapeseed oil prices settle down 60 CNY at 10,840-10,940 CNY/tonne in coastal regions in tepid trading.
Malaysian palm oil exports were down 4.6%-6.5% month on month to 1 mln-1.5 mln tonnes in February, whilst February production captured a rise; hence, BMD palm oil futures declined on Tuesday. The consumption of rapeseed oil is affected by its huge price spread with soybean oil and palm oil. Rapeseed oil prices are thus lower. But China’s rapeseed oil stocks decreased 15.9% to 188,000 tonnes last week and soybean oil stocks were also 3% lower to 847,000 tonnes, so there is no pressure in oils supplies now. Meanwhile, some domestic mills have a plan for downtime in March and April as soybean imports are forecast to be only 6.2 mln tonnes in March. Hence, fundamentals remain bullish in oils market. Rapeseed oil market is predicted to have little downside space in the short term, and to strengthen at the high level on the whole.
Cottonseed oil: Cottonseed oil prices partly fluctuate by 100 CNY/tonne at the high level in China today. The oils remain bullish on fundamentals. And buyers start taking delivery with festive air fading away. Soybean oil stocks have declined to less than 850,000 tonnes. Meanwhile, soybean arrivals in March are forecast to be only 95 cargoes or 6.2 mln tonne, making many crushing mills idled during the month of March and April. Likewise, palm oil and rapeseed oil stockpiles are lower than the corresponding period in former years. Thus, the overall oils market will continue the strength in the near term. In addition to this, a majority of oil plants have yet to resume the operation, which boosts cottonseed oil price. However, oils futures further drop on Dalian Commodity Exchange today. In the cash market, soybean oil falls by 10-80 CNY/tonne and palm oil decreases by 70-80 CNY/tonne. Additionally, being a kind of blending oil, downstream demand for cottonseed oil is limited. It is projected that cottonseed oil market will follow bulk oils to fluctuate in a short term but still stay strong on the whole.
Sunflower oil: Sunflower oil prices are mostly stable and some mixed in China today. Grade I imported refined sunflower oil is offered at 12,000-12,600 CNY/tonne, and crude sunflower oil is offered at 11,600 CNY/tonne.
Currently, fundamentals remain positive in China’s oils market: soybean oil stocks keep declining as soybean crush did not pick up much last week and soybean oil delivery is recovering with the end of the festival; and rapeseed oil and palm oil stocks are also lower against this time in previous years. And sunflower oil import cost has been lifted as the reduction in Ukrainian sunflowerseed production has pushed higher prices. These are supporting sunflower oil market. But Dalian oils futures continue losses today, and spot soybean oil goes down 10-80 CNY and palm oil down 70-80 CNY, which is negative to sunflower oil prices. In the near term, sunflower oil market in China is predicted to fluctuate to strengthen.
Corn oil: Corn oil prices are stable with partial rise in China today. Grade I corn oil price is 11,000-11,400 CNY/tonne, up 300-600 CNY/tonne. (Shandong 11,000-11,400 CNY, up 300 CNY; Hebei 11,000; Liaoning 11,000; and Sichuan 11,300, up 600 CNY); and crude corn oil is offered at 9,500-10,100 CNY/tonne, up 250-700 CNY. (Henan 9,500, Hebei 10,000-10,100, up 250; and Inner Mongolia 10,000, up 700).
The processing cost for corn oil remains high under high feedstock corn germ prices, and operation rates are lower as corn germ is in tight supply. Hence, oil millers have strong sentiment to support prices. Besides, domestic sunflower oil prices still keep firm. 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 ¥6.46)