POINTERS 2014 MPOC
Palm Oil Internet Seminar
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Section 1 : CPO Price Trend:
Changes of Oils & Fats S&D in China Under the Background of Easing US - China Trade Tension and African Swine Fever Outbreak
By: Mr. Cai Neng Bin

He is the General Manager of Shanghai Pansun Company. His roles and responsibilities in the company are analyzing oilseeds and oils and fats market information, with main emphasis given on systematic data analysis and make judgement on market trading pattern. He is also able to gauge the change of medium to long market trends of agricultural products, and provides trading and hedging strategies through capturing price differences arises from logical error within markets, and between different products and months.
VIEW PROFILE
1. Some relaxation of trade tensions between China and US looses soybean supply in China.

Soybean output is estimated to experience a steady growth with favorable weather in South America. Although policy uncertainty is expected to impact soybean importation from US and South America, increase in total import volume is limited.


2. Strong policy support helps the recovery of swine-raising activities but it still needs more time

The increase in quantity of live sows, releasing of state pork reserves and rising imports relieve the tight pork supply at the moment.
The fluctuation of poultry raising with limited room for improvement is able to ease the volatility of demand for seasonal soybean meals, where demand for soybean meals will be higher in 2H 2020.


3. Demand for soybean meal restricts soybean crushing

Although the soybean crushing profit improved, the uncertainty in recovery of soybean meal demand still restricts soybean crushing activity and manufacturers will control the soybean purchasing rhythm.


4. Tight oils & fats supply in China

China depends more heavily on imports. Oils & fats consumption becomes divided due to changing supply structure.


5. Oils & fats supply reduced and destocking in the first half 2020

Weak demand for soybean meal restrains soybean crushing. Poor profit of palm oil imports. Restricted policy on rapeseed and rapeseed oil imported from Canada.


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Questions & Answers (8) :
Anthony Yap
8 hours ago
African Swine Fever; no more incident happened? 非洲猪瘟是否已经得到控制和正式结束了?哪一个省市已经恢复了正常供应?
Anthony Yap
8 hours ago
How the Government going to protect local farmers’ interest as expected influx of supply of commodities after USA –China signed off the Phase 1 trade agreement. 中美贸易战签署第一阶段的协议过后,中国会大量进口美国的大豆,事后政府该如何保护当地农民的利益?
Anthony Yap
8 hours ago
How frequent the State Reserve rotate the soybean? How the programme of rotation conducted since market current is soft due to Covid-19? 国家储备的大豆的轮换次数,在一年里有多少次?市场因新型冠状病毒而受到影响,大豆的价格受影响而低廉,轮换的项目该如何进行?
Tey Poh Leng
10 hours ago
When you expect the Covid 19 in Hubei Province to be contained?
Tey Poh Leng
11 hours ago
Page 2: Increase of amount purchase of soybean for state reserve; What is the estimated quantity to be imported?
Fatah
1 day ago
China is embarking on environmental policies. In terms of fossil fuel usage, is there plans to switch to more friendly fuels like palm based biodiesel. In your paper, you China imposed restriction on RSO imports. Why? What are the restrictions been imposed.
Cai Neng Bin:
China's environmental protection policy actively promotes the use and upgrading of clean and renewable energy, and promotes the popularization of electric vehicles, natural gas fuel vehicles, ethanol gasoline, etc. At present, the policy focuses on the use of ethanol gasoline and has been implemented in many provinces. However, due to the decline of domestic corn inventory and the limited capacity of biofuels, China will stop the original plan of 10% ethanol gasoline in 2020. In terms of biodiesel, enterprises try to produce and use it according to their own conditions, and actively deal with the conversion of recycled oil, but the country unable to promote the use of it at the policy level like what was being done for ethanol. In addition, palm oil has higher temperature requirements, and the complete reliance on imports also limits its use in China. China's rapeseed oil import mainly relies on Canada. On December 1, 2018, Canada arrested Meng Wanzhou, chief financial officer of Huawei, at the request of the U.S. authorities, and has been detained so far, resulting in tense trade relations between China and Canada. China will significantly reduce Canadian rapeseed and rapeseed oil imports from 2019 and import from other countries, but it cannot replace the supply gap created by shortage from Canada.
16 hours ago
Nur Fairuz
3 days ago
What has developed in China’s oils and fats complex since the signing of phase 1 of US-China trade deal. What is the minimum quantity of tariff free US soyabean import you expect China to receive so that the US-China trade saga will not be a problem for China soybean users
Cai Neng Bin:
Upon the signing of trade agreement between China and the U.S., China actively carried out the inquiry of American agricultural products. Although China's enterprises increased the application for the quota to import tariff free soybean respectively, current US soybean still has no price advantage over Brazilian soybean, and China still actively purchases Brazilian soybean. From a global perspective, there is still ample supplies of soybean. With Sino-US trade tension eases, China's soybean procurement channels are no longer restricted or limited, and China will appropriately increase soybean imports this year.

Since the issuance of tariff free quota measures last year, China has increased the purchase of soybeans, which is implemented in stages according to the tariff reduction agreement. At present, affected by African swine fever and coronavirus, China's demand has declined significantly, which has affected China's import demand to a certain extent. Increasing soybean procurement means reducing the procurement of some Brazilian soybeans. The procurement volume of soybeans depends on the amount of procurement guided by Chinese government and the price competitiveness of soybeans between US and Brazil. According to the agreement, it is expected that the procurement volume of soybeans will still exceed 30 million MT this year, reaching the level of 2014-2015.


3 days ago
Candy Lee
4 days ago
What is the impact on COVID 19 against Palm Oil industry?
Cai Neng Bin:
The outbreak has led to disturbance of traveling and transportation system, which led to significant reduction in oils consumption. Even if the outbreak is over, it will take a long time to recover the demand in the later stage. At present, the disposal of stock among the coastal factories has declined significantly, the inventory has remained above 1 million MT at the end of February, and the import needs of palm oil in China will also decline significantly in the first half of the year. It is estimated that China's palm oil consumption will decrease by 400,000-500,000 MT in 2020 compared with 2019
3 days ago
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