After the palm oil futures price broke through the 8,000 yuan/ton mark in mid-March, Tomb-Sweeping Day rose strongly to a nearly one-year historical high of 8,572 yuan/ton that week, driven by market bullish sentiment. However, due to factors such as the fall in crude oil prices and the cooling of biodiesel theme, the main contract of palm oil fell by more than 4% after the holiday, and then it started a high and narrow oscillation trend. With the end of Ramadan, it is expected that the production of producing areas will begin to recover, and palm oil inventories are expected to have a bottom inflection point in the second quarter. Domestically, the upside-down import profits restrict the purchase, and palm oil stocks are difficult to accumulate. Under the internal and external lido resonance, palm oil is expected to continue to lead the oil market in the short term.
Malaysia continues the destocking pattern.
Due to the Eid al-Fitr holiday, the release of the monthly supply and demand report of Malaysian Palm Oil Bureau was postponed to April 15th. A few days ago, both Bloomberg and Reuters released forward-looking data, and their expectations of limited recovery of Malaysian palm oil production in March, rapid export growth and continued storage were relatively consistent. Forward-looking data show that palm oil production is 1.36 million-1.38 million tons, an increase of 8%-9.76% from the previous month. From the export point of view, the hoarding of palm oil by traders during Ramadan and Eid al-Fitr has a strong stimulus to the export of producing areas, which is about 1.23 million tons, an increase of 21% from the previous month. Foresight data predicts that Malaysia’s palm oil inventory in March will be 1.76-1.79 million tons, falling to the lowest level since July last year for five consecutive months, with a decrease of 6.65%-8.33%, mainly due to the limited recovery of Ramadan production and the expected increase in downstream purchase demand.
Since March, the import cost of palm oil has continued to rise. As of April 7th, the FOB price of palm oil in Malaysia was US$ 1030/ton, the CIF price was US$ 1035/ton, and the import cost price was RMB 9013/ton. Poor import profits restrict domestic palm oil from buying ships. From the demand side, under the high spot price, the downstream trading situation did not improve significantly. Due to the continuous narrowing of the spread between soybean and palm oil, soybean oil occupied the palm oil consumption side obviously. The downstream of palm oil is mainly purchased by food factories, and the transaction volume is low. According to the statistics of Steel Federation, as of the week of April 7, the turnover of palm oil in key oil plants nationwide was 1,720 tons, while that of palm oil in key oil plants last week was 3,900 tons, with a decrease of 2,180 tons or 55.89%. The commercial inventory of palm oil in key areas of the country was 529,650 tons, a decrease of 36,400 tons or 6.42% compared with last week; Compared with last year’s 939,300 tons, it decreased by 409,700 tons, a decrease of 43.61%.
The price difference of competing products fell to a historical low.
Since 2024, the price difference between bean brown and vegetable brown has continued to decline. By the end of Tomb-Sweeping Day, the spread of 2405 contract bean brown had fallen to a historical low of 662 yuan/ton, and the spread of 2405 contract vegetable brown had fallen to a historical low of 316 yuan/ton. Since March, the fundamental logic of the three major oils and fats in the inner market has been divided. In the second quarter, the expected arrival of domestic imported soybeans and rapeseed in Hong Kong increased greatly, with the monthly arrival of imported soybeans exceeding 10 million tons in the second quarter, while the overall boost of the catering industry on the demand side was relatively limited, and the expected strong supply and weak demand limited the space above the bean vegetable oil.
South America’s soybean harvest season is gradually released, and the market enters the price-led cycle of the US soybean planting season, and the weather theme may start trading. The DMO policy of palm oil producing areas has been adjusted, which has benefited the market. At the same time, Ramadan has slowed down the recovery of production in producing areas and boosted export demand. It is expected that the producing areas will begin to accumulate stocks in the second half of the second quarter. Against the background of short-term tight internal and external supply, global palm oil prices still have boosting expectations. Domestic palm oil is affected by poor import profits, and the purchase of ships in the second quarter is relatively low, and the inventory is still expected to go down.
Looking forward to the market outlook, the trend of the oil and fat sector will continue to differentiate in the second quarter, with short-term palm oil performing the strongest, while soybean oil and vegetable oil performing weakly. With the gradual recovery of palm oil production, the unilateral upside of palm oil will gradually narrow, and the spread between bean palm and vegetable palm is expected to rebound. (Author: Guoyuan Futures)