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China tripled its import of palm oil & European disappointing rapeseed production

China tripled its import of palm oil & European disappointing rapeseed production

Your Bi-weekly update on edible oils & fats by Aveno
September 11th, 2019



We noticed increased imports of vegetable oils and animal fats into China, India, Pakistan and Bangladesh: representing 3.18 billion consumers or 41% of world population. This is expected to continue into the 2019/20 marketing season and will support oil prices.

It was reported that, in august, China tripled its imports of palm oil, a key ingredient in mooncakes. A mooncake is a Chinese pastry traditionally eaten during the Mid-Autumn Festival, in September and October. During the festival for lunar appreciation and moon watching, one of the more important Chinese festivals, the delicacy is offered to friends and relatives during celebrations. China is importing more oil to compensate the lesser domestic crush of rapeseed and soybeans due to lesser demand for meal for animal feed (African Swine Fever problems) and China also imported sun and soybean oil from Ukraine.

The sunflower seed oil market continued its downward momentum as with improved seed availability selling interest outweighs buying interest and buyers have been quiet over the last few weeks which pressured prices. For the high oleic sun oil market it is too soon to say which direction that will go and if the new crop production can keep up with the growing demand. Especially after a season with near zero carry over.

With disappointing European rapeseed production this season, imports remain key to price evolution. Rapeseed prices continued to increase, widening the premium over sunflower seed and soybeans. Imports from Ukraine can only temporarily ease the shortage pain and analysts expect still higher prices in the coming weeks and months. Little relief is expected from Australia which has no carry over from the old crop and which also faces a disappointing crop (drought).


After a slight increase the average EU butter price dropped to 363€/100 kg, (-0.3% vs last month, -16.5% since January and -35% compare to last year). We also witnessed a decrease of butter prices in Oceania (-3.9%) and in the U.S. (-5.9%). Butter in Oceania is now slightly cheaper than in the EU (4000 vs 4022 $/t).

Soybean oil markets remain difficult as the US-China relationship casts a big shadow on the situation and there is uncertainty on the size of the new crop in North America. This year’s carry out at the end of august is estimated at 28 million tons, compared to 12 last year and 8 million tons in 2017. In Argentina biodiesel producers are upset over the government’s unilateral move to freeze biodiesel prices which negatively impacts producers, even causing them to shut down. We already saw less biodiesel production and increased exports of soybean oil. South America is also preparing the sowing in of the next crops.

Petroleum price on September 10, 2019

Brent Price: $63.20 per barrel

Petroleum prices go up or down depending on which news of the day outweighs the other: pessimism about the health of the global economy or a slowdown of shale oil production in the U.S. which could trigger a price rally (“in need higher oil prices or the global market will soon be under supplied”…) or a ministerial reshuffle in Riyadh. But, so far, nothing yet brought back a real bullish sentiment in the petroleum market.

Source: Oilprice.com

Trump would like a weaker USD but the Euro seems to stabilize around $ 1.10 and some analysts even forecast the Euro to depreciate further to $ 1.07 in the next 3 months because there is still a 2.6% interest difference between both currencies and because the Euro is no longer undervalued vs the dollar…


Don't forget to check out our other bi-weekly updates!

There is some complexity to the business we daily operate in. To help understand the business of being an edible oil and fat producer we've launched this bi-weekly newsletter.

Every two weeks we will share an update about edible oils and fats. You can find all previous updates on: https://www.aveno.be/search/label/newsletter


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Disclaimer

Unless otherwise mentioned the crude oil values quoted in these documents are prices landed in EU without import duties, handling, storage, financing, refining, packing, transport or any other cost related to bring the product to market. They are used as market trend illustration. Substitution of oils is possible but different oils have different fatty acid profiles and are not all interchangeable for all applications. One can make biodiesel from all oils and fats but one cannot make mayonnaise from coconut oil. This document is exclusively for you and does not carry any right of publication or disclosure. This document or any of its contents may not be distributed, reproduced, or used for any other purpose without the prior written consent of AVENO. The information reflects prevailing market conditions and our present judgement, which may be subject to change. It is based on public information and opinions which come from sources believed to be reliable; however, AVENO doesn’t guarantee the correctness or completeness. This document does not constitute an offer, invitation, or recommendation and may not be understood, as an advice. This document is one of a series of publications undertaken by AVENO and aims at informing broadly a targeted audience about the edible oils & fats market. AVENO’s goal is to keep this information timely and accurate however AVENO accepts no responsibility or liability whatsoever with regard to the given information.


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Aveno: China tripled its import of palm oil & European disappointing rapeseed production
China tripled its import of palm oil & European disappointing rapeseed production
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