The tight supply of oil and fat at home and abroad continues to ferment, the market bullish atmosphere is stronger, support prices continue to rise, and the price of soybean oil and palm oil futures of Dashang has once again broken through the 10,000 yuan mark, hitting a new high since 2012. Oil and fat prices are expected to remain firm in the short term, but the risk of a correction needs to be guarded against.
With the digestion of bearish news, U.S. beans are back on the top of 1200 cents / bushel, and it is expected that the price will continue to rebound for a limited extent in the later period. The weak pattern of oil strong meal continues, suppressing domestic soybean meal prices, and it is expected that short-term soybean meal prices will run weakly. The tight supply of oil and fat at home and abroad continues to ferment, and the price of soybean oil and palm oil futures of large commercial firms has once again exceeded the mark of 10,000 yuan, hitting a new high since 2012, paying attention to preventing the risk of pullback brought about by the liquidation of capital profits.
U.S. beans are listed on the market and the rebound is limited
With the digestion of the bearish end-of-September quarterly inventory report and the October supply and demand report, coupled with the acceleration of U.S. soybean exports, U.S. soybean prices rebounded this week, re-standing above 1200 cents/bushel.
The U.S. bean harvest has entered its peak period, and the recent rainfall in the production area has increased, and the harvest progress has slowed down, and the current harvest progress has exceeded 60%. Meteorological models show that rainfall in soybean-producing areas in the United States has decreased significantly this week, and the progress of the soybean harvest is expected to accelerate later in the period.
According to the crop weekly report released by the USDA, as of October 17, the soybean leaf fall rate in the 18 major soybean producing states in the United States was 95%, compared with 91% in the same period last week, 96% in the same period last year, and 95% in the same period in the same period in the fifth year; the soybean harvest rate was 60%, 49% in the same period last week, 73% in the same period last year, and 55% in the same period in the fifth year.
With the concentrated harvesting and listing of soybeans in the United States, the speed of soybean exports has accelerated. According to the USDA Export Inspection Weekly Report, in the week ended October 14, the US soybean export inspection volume was 2.298 million tons, compared with 1.743 million tons in the previous week and 2.337 million tons in the same period last year. So far, U.S. soybean export inspections totaled 5.873 million tonnes in 2021/2022 (beginning September 1), down 50.6% year-on-year. Among them, the cumulative shipment of soybeans to China (mainland China) was 3.658 million tons, down from 8.035 million tons in the same period last year.
According to data released by consultancy AgRural, brazilian soybean seeding progress in 2021/2022 reached 22% as of Oct. 14, up 12 percentage points from 10% in the previous week and up from 8% in the same period last year. This year, the pace of sowing in Brazil hit the second fastest level in the same period of history. Among them, the soybean sowing in Mato Grosso was 45.06%, an increase of 24.75 percentage points over a week ago, and also higher than the historical average of 25.83%. Recently, the weather conditions in Brazil's soybean-producing areas are better, and the sowing rate will be further accelerated. Meteorological models show that in the past two weeks, the main soybean producing areas in Brazil have been covered by rainfall, and the rainfall distribution is relatively even, which is conducive to the promotion of soybean sowing.
The concentrated harvesting and listing of soybeans in the United States, the quotation of soybean export premiums gradually fell, and the price of US beans was pressured, but due to the rapid recovery of Soybean crushing profits in China, the recent progress of soybean procurement by oil mills has accelerated significantly, which has supported the price of US beans. Soybean sowing in Brazil continues to advance, the progress is faster than usual, and the area growth is expected to be strong. In the later period, the U.S. soybean market was affected by the dual impact of U.S. soybean export sales and South American weather, and it is expected that prices will continue to rebound for a limited extent, mainly by shock adjustment.
Soybean meal runs weakly, and the basis remains firm
Recently, the domestic soybean meal price is running weakly, the downstream enterprises are cautious in procurement, and the transaction has declined. On October 20, the spot quotation of 43% protein soybean meal in coastal areas was 3480~3670 yuan/ton, down 30~80 yuan/ton from the same period last week. Among them, the quotation in North China is 3650~3670 yuan /ton, the quotation in East China is 3530~3640 yuan/ton, and the quotation in South China is 3480~3620 yuan/ton.
Tianjin ordinary protein soybean meal spot basis quotation M2201+400 yuan / ton, Shandong Rizhao October basis quotation M2201+340 yuan / ton, Jiangsu Zhangjiagang November basis quotation M2201+270 yuan / ton, Guangdong Dongguan 10-November basis quotation M2201 + 280 yuan / ton, some areas fluctuated 20 ~ 40 yuan / ton compared with last week.
With the end of the National Day holiday, the domestic soybean crushing volume has increased. Monitoring shows that the commercial inventory of soybeans imported by major oil mills across the country at the end of last week was 5.01 million tons, down 590,000 tons from the same period in the previous week, 1.39 million tons from the same period last month, and 1.68 million tons less than the same period last year. Domestic soybeans arrived at hong Kong at more than 6.8 million tonnes in October, and soybean crushing will continue to increase in the later period, and soybean stocks are expected to continue to decline.
Last week, domestic soybean crushing increased and soybean meal output increased, but soybean meal stocks continued to decline due to the accelerated speed of feed farming pickups. On October 18, the stocks of soybean meal in major domestic oil mills were 580,000 tons, down 20,000 tons from the same period last week, 230,000 tons from the same period last month, 330,000 tons less than the same period last year, and 230,000 tons less than the average of the same period in the past three years. With the increase in oil mill operating rates, soybean meal stocks are expected to continue to decline with limited space.
With the concentrated harvesting and listing of U.S. beans, the sowing of soybeans in Brazil continues to advance, and the price of U.S. beans is weak, and it is difficult to get support for soybean meal at the cost end. The global oil supply is still tight, crude oil prices continue to rise, oil prices are firm, the pattern of strong oil meal continues, suppressing soybean meal prices, and it is expected that short-term soybean meal prices will run weakly.
Due to the large number of U.S. beans arriving in Hong Kong still needs time, Brazilian soybean arrivals are significantly reduced compared with the previous period, domestic soybean arrivals in October are still low, soybean and soybean meal inventories continue to decline, oil imported soybean supply is tight, oil mill soybean meal sales pressure is not large, the willingness to hold up prices is strong, and it is expected that soybean meal basis quotations will remain high.
Soybean oil is bullish and dominant Prices extend their rally
Recently, the domestic soybean oil price has continued to rise, and downstream buyers have purchased cautiously and the transaction is general. On October 20, the first-class soybean oil market in coastal areas was quoted at 10620~10750 yuan /ton, up 200~240 yuan/ton over the same period last week. Among them, 10680~10700 yuan / ton in North China, 10660~10750 yuan / ton in East China, and 10620~ 10680 yuan / ton in South China.
Recently, the phenomenon of power curtailment and production restriction in various places has eased, and some oil mills have resumed operation, and the operating rate has increased. Monitoring showed that the domestic soybean crush last week was 1.67 million tons, an increase of 260,000 tons from the previous week, but 420,000 tons less than the same period last year, and 180,000 tons less than the average of the same period in the past three years. Due to the rapid recovery of soybean crushing profits and the increased enthusiasm of oil mills, it is expected that the oil mill operating rate will continue to increase this week, and the soybean crushing capacity will increase to about 1.75 million tons.
Domestic soybean crushing volume rebounded, soybean oil output increased, but the speed of downstream enterprises to pick up goods has accelerated, soybean oil inventory fell slightly. Monitoring shows that on October 18, the country's major oil mills soybean oil inventory of 900,000 tons, down 20,000 tons from the same period last week, an increase of 50,000 tons month-on-month, a year-on-year decrease of 400,000 tons, and a decrease of 600,000 tons from the average of the same period in the past three years. In the later period, the operating rate of oil mills will continue to rise, the amount of soybean crushing will increase, and it is expected that soybean oil inventories will stop falling and rise in the later period.
Canadian rapeseed production has fallen sharply this year, the tight global rapeseed supply pattern continues, and rapeseed prices have risen firmly. Although the current palm oil in Southeast Asia is in a period of abundant production, but due to the control of the epidemic, the shortage of oil palm plantation labor, palm oil production does not increase but declines, the market bullish atmosphere is stronger, palm oil prices continue to rise. International crude oil and related energy market prices continue to rise, but also positive oil prices.
The tight supply of oil and fat at home and abroad continued to ferment, supporting prices to continue to rise, among which the price of soybean oil futures of large commercial firms once again broke through the 10,000 yuan mark, hitting a new high since 2012. Recently, domestic soybean arrivals and crushing volumes are low, and soybean oil stocks are also at low levels. It is expected that the price of soybean oil will remain firm in the short term, but it is also necessary to pay attention to the risk of pullback brought about by the liquidation of capital profits.
Tight supply continues to run at a high level in palm oil
Recently, the domestic palm oil price has continued to rise, the basis quotation has weakened, buyers have used it as they please, and the transaction is light. On October 20, the domestic coastal area of 24 degrees palm oil quotation of 10470 ~ 10550 yuan / ton, up 130 ~ 150 yuan / ton over the same period last week. Among them, Tianjin 10530 yuan / ton, Shandong Rizhao 10550 yuan / ton, Jiangsu Zhangjiagang 10520 yuan / ton, Fujian Xiamen 10500 yuan / ton, Guangdong Guangzhou 10470 yuan / ton.
This week, domestic and foreign palm oil prices continued to rise, and imports remained inverted. Monitoring shows that on October 20, Malaysia's November ship schedule of 24 degrees palm oil CNF quoted 1358 US dollars / ton, equivalent to the arrival of the tax payment cost of 10520 yuan / ton (tariff 9%, VAT 9%), 700 yuan / ton higher than the 2201 contract; January ship date palm oil CNF quoted 1305 US dollars / ton, equivalent to the arrival of the tax payment cost of 10020 yuan / ton, 200 yuan / ton higher than the 2201 contract. Palm oil import profits deteriorated, domestic traders' willingness to purchase declined, and no new ships were bought.
This week, the arrival of domestic palm oil at the port decreased, the downstream pickup speed was basically normal, and the palm oil inventory stopped rising and falling. On October 20, the inventory of edible palm oil in coastal areas was 400,000 tons (plus about 480,000 tons of industrial palm), 40,000 tons less than before the holiday, an increase of 80,000 tons month-on-month, and a decrease of 30,000 tons year-on-year. Among them, Tianjin is 85,000 tons, Jiangsu Zhangjiagang is 130,000 tons, and Guangdong is 100,000 tons. Palm oil is expected to arrive at 430,000 tons in October, due to the high price of palm oil, the low price difference between bean palm and palm, coupled with the drop in temperature, all of which inhibit the demand for palm oil consumption, and it is expected that the inventory will continue to decline in the later period.
At present, palm oil in Southeast Asia is still in the peak production period, but due to the shortage of plantation labor, some mature fruit bunches cannot be harvested in time, making palm oil production difficult to grow, and it is expected that 10 malaysian palm oil production will fall by 2% month-on-month to 1.75 million tons. With the falling temperature, coupled with the continuous rise in palm oil prices, major importers have reduced their purchases, palm oil exports continue to decline, but the reduction of Indian palm oil import tariffs will restrict the decline in palm oil exports.
According to shipping agencies, Malaysia's palm oil exports from October 1 to 10 decreased by 7.8% to 14.65% month-on-month. Malaysian palm oil exports are expected to fall 5% month-on-month to 1.52 million tonnes in October, with palm oil inventories at around 1.7 million tonnes at the end of October, up from 1.57 million tonnes in the same period last year, but remaining at a low level. The tight global palm oil supply pattern is difficult to change in the short term, and it is expected that prices will remain high.
Crushing margin improves Soybean purchases accelerate
With the digestion of the bearish news in the U.S. soybean market, the price of soybean futures on the Chicago Mercantile Exchange (CBOT) rebounded this week, the domestic soybean oil price trend was firm, hitting a new high in many years, and soybean meal prices fell sharply. On October 20, the closing price of the main soybean meal contract of Dashang Institute rose by 0.4% to 3237 yuan / ton, down 62 yuan / ton from the same period last week; the closing price of the main soybean oil contract closed slightly higher by 1.18% to 10120 yuan / ton, up 448 yuan / ton from the same period last week.
U.S. soybean prices rebounded slightly, soybean exports rose steadily, and U.S. soybean import costs rebounded. Monitoring shows that the Bay of America soybean November ship schedule CNF quotation of 591 US dollars / ton, the liter discount quotation to the CBOT November contract premium of 380 cents / bushel, the customs price of 4365 yuan / ton (3% import tariff, 9% value-added tax), up 100 yuan / ton from the same period last week; Brazil soybean February ship schedule CNF quotation of 568 US dollars / ton, the premium quotation to the CBOT March contract premium of 300 cents / bushel, the customary price of the arrival of 4210 yuan / ton, Up 115 yuan / ton from the same period last week.
Domestic soybean oil prices continued to rise, soybean meal prices slowed down, and imported soybean plate crushing profits continued to improve. Monitoring shows that the Profit of U.S. Bay Soybeans in November on the January contract of Dashang was -25 yuan / ton (3% import tariff, processing fee of 200 yuan / ton), which was basically the same as the same period last week, up 180 yuan / ton from before the National Day holiday; the February shipping period of Brazilian soybeans was -120 yuan / ton of the May contract of Dashang, down 20 yuan / ton from the same period last week. Due to the recent soybean meal, soybean oil spot and basis quotations are firm, the spot crushing profit is good, generally above 300 yuan / ton.
Due to the slow progress of soybean purchases in the previous four quarters compared with previous years, with the recent sharp improvement in soybean crushing profits, the enthusiasm of domestic oil mills to purchase has increased significantly, focusing on the purchase of US soybeans in november-January and a small amount of Brazilian soybeans after February next year. As of this week, soybean purchases were 70% complete in November and only 20% in December. Shipping schedule monitoring shows that the domestic soybean arrivals in October were about 6.8 million tons, lower than the 8.69 million tons in the same period last year, and the arrival of soybeans in early November was still low, and it is expected that the arrival volume will increase in late November, when soybean stocks may stop falling and rise. (Originally published on October 23, 2021, grain and oil market newspaper A03 edition)
Source丨grain and oil market report
Total Duty 丨 Liu Xinhuan Coordinator 丨 Liu Chao Editor 丨 Congshen