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Production & Marketing
Palm Oil in China Market
Since early of June, the palm oil price began to increase due to the effect of international market. In the mid-June, the price increased to 5100 RMB/ton and remained stable until late of June. At present, the prices for 24 degree palm oil are 5050-5080 RMB/ton, 5100-5130 RMB/ton, 5100-5120 RMB/ton and 5130-5150R MB/ton in Tianjin Port, Zhangjiagang, Lianyugang and Yantai Port, respectively.
As a major palm oil imported country, the price is closely following that of in the international market. In recent time, the palm oil price dropped greatly in Malaysia stock and sales market. The import volume increased in China and the arrival of shipments are concentrated in the same time, also the storage are abundant in many factories. As estimated, the trend of decreasing of price will be continued in near future.
The import quota for palm oil will be 2.6 million tons this year. The supply of palm oil is sufficient in the domestic market, which will bring great pressure for the price going dowen and the pressure will be even more influenced by the lower price of soybean oil and other processed oil.
The industry specialists indicated that, although now it is the busy season for the palm oil consumption and the consumption volume is increasing in this season, the price can hardly going up because the arrival of imported palm oil are concentrated and it is also the peak period of palm oil output in Malaysia. The palm oil price in the international market would be relatively stable so the price of palm oil in the domestic market would not change too much, at least it would not go up in near future.
China's Government to Sell 500,000MT State Soybean Stock
With a joint decision by the State Development and Reform Commission (SDRC), State Grain Administration Bureau and the Ministry of Finance, China State Grain Reserve Management Corp. will hold auctions at the Dalian North Grain Exchange Market on July 29 to sell 500,000 MT of soybeans, produced between 2000 and 2002, carried in the state reserve warehouses in Inner Mongalia, Liaoning, Jilin and Heilongjiang. According to the bulletin published by the exchange, the buyers are designated to be domestic soybean crushing enterprises. The traded soybeans will be delivered to the buyers between Aug 1 and Sep 30.
The bulletin said each oil plant taking part in the auctions would only be allowed to buy an amount of soybeans equivalent to its two-month crushing capacity and that total purchases by a single buyer should not exceed 50,000 MT.
The participants in the auctions should present cognizance documents of their production capacity issued by local grain or industrial and commercial authorities along with other legal documents when registering at the Dalian North Grain Exchange Market.
The amount of 500,000 MT of soybeans is a part of totaled 800,000 MT that Chinese government has earlier announced to sell from the state reserve stocks onto the market in the near term in a bid to meet the demand from the local soybean crushers.
Chinese Soymeal Prices in Shandong Seen To Keep Fluctuation
Over the past month, Chinese soymeal prices have maintained fluctuating in eastern and northern areas, particularly in Shandong, which is the main producing as well as consumption area in China. Soymeal prices in the province have kept marked ups-and-downs since early June in the range of RMB2,120/MT and RMB2,200/MT. Soymeal prices in the areas witnessed recent decline of RMB20/MT from last weekend with quotes at RMB2,140-2,150. However, it is hardly expected that soymeal prices in the province will follow the downward movement but likely keep fluctuating in the foreseeable future due to successive influence by demand and supply factors.
As one of the leading livestock producing provinces, Shandong is walking into a hot season for poultry production in July and August, leading to a significant increase in the consumption of soymeal in the two months. Current continuous expansion in the total poultry inventory will encouraged the local feed industry to enlarge greatly their production as well as their purchase of soymeal.
On the other hand, some oil plants tend to slow down crushing soybeans to reduce soymeal output and boost soymeal prices so that they can maintain profits. Therefore, reduction in the supply of soymeal in local market is likely to induce rebound in soymeal prices in some parts of the market in the near term.
However, price hikes for soymeal are prone not to be sustainable since ample supply of imported soybeans in Shandong and large-scale crushers in northern China will anyway maintain production, which will enrich soymeal supply in the area. Meanwhile, the sellers in Shandong are facing the problem in transportation and storing with the coming of flood season along with high temperatures in summer, pressuring their soymeal sales to some degree.
In addition, the comparatively profitable soymeal prices in Shandong will attract great influx of soymeal with lower prices from other areas, particularly from Dalian, capping the upward momentum in the soymeal prices in Shandong.
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