Palm oil prices are relatively firm.
Recently, the international crude oil price has continued to fall and there is a lack of weather drive in oil-producing areas. At the same time, palm oil production has entered a seasonal growth season, and the shortage of labor in Malaysian plantations has improved, which has led to a significant increase in palm oil production, and palm oil prices are facing the risk of correction.
Palm oil in Malaysia has officially entered the growth cycle, the tight supply situation is gradually improving, and the inventory is on the rise. According to the data released by MPOB, in April, Malaysia’s palm oil accumulated to 1.74 million tons. In April, the export decreased by 7% to 1.23 million tons, and the output increased to 1.5 million tons, an increase of 7.86% from the previous month. Since the beginning of this year, the output of horse palm has been above the five-year moving average, and the output has recovered well. UOB predicts that palm oil production in Malaysia will increase by 7%~11% in the first 20 days of May, MPOA predicts that palm oil production in Malaysia will increase by 18.12% in the first 20 days of May, and SPPOMA predicts that palm oil production in Malaysia will increase by 15.7% in May, which is significantly higher than the five-year average and at a high level in the same period in history.
On the export side, shipping data showed that the export of horse palm increased by 22% month-on-month to 1.48 million tons in May, among which the increase of palm oil imported from India and China was more obvious, mainly due to the gradual widening of the international spread of bean palm oil, the gradual narrowing of the spread of palm oil between Malaysia and India, and the emergence of a profit window for palm oil imports from China and Indonesia. According to Indian brokers’ estimates, India’s palm oil imports jumped to 769,000 tons in May, the highest level this year, mainly because the increase in import profits prompted traders to increase their purchases of refined palm oil, from 124,000 tons in April to 214,000 tons. Based on the high-frequency data of horse palm production and export, it is expected that there will be a slight accumulation of stocks at the end of May, and the stock of horse palm will increase by 2.3% from April to 1.78 million tons.
Indian brokers estimate that India’s palm oil imports continued to maintain a strong momentum in June, with an import volume of about 750,000 tons. The import price of crude palm oil (CPO) delivered in July was about 948 US dollars/ton, while soybean oil and sunflower oil were quoted at 1,028 US dollars/ton and 1,035 US dollars/ton respectively. Crude palm oil maintained a competitive price advantage. However, Indonesia has lowered the export tariff of palm oil since June. The Indonesian Ministry of Trade has set the reference price of crude palm oil in June at 778.82 US dollars/ton, which is lower than that of 877.28 US dollars/ton in May. Based on the new reference price, the export tariff and special tax of crude palm oil will be 18 US dollars/ton and 75 US dollars/ton respectively, which will be lowered by two steps as a whole and reduced by 49 US dollars/ton compared with last month. The market reflects that the export data of horse palm increased more than expected in late May because some Indonesian goods were transferred to Malaysia for delivery. With the reduction of export tariffs in Indonesia, the export competitiveness of horse palm declined, the export prospects weakened and the output maintained a good growth rhythm. In June, horse palm may be further accumulated.
With the arrival of palm oil production season, the export quotation of producing area is lowered, the profit window of palm oil import in China is opened, and the long-term purchase is obviously increased. Last week, 4 new ships were sold in June, 4 new ships were sold in July, and 3 new ships were sold in September. It is estimated that palm oil will reach 370,000 tons in June and will surge to 570,000 tons in July. In June, China’s palm oil stocks gradually stabilized. Relevant data show that on June 4th, the palm oil stocks were 434,000 tons, up 9,000 tons from last week. From the historical consumption, the average monthly consumption of palm oil in summer is 350,000 to 400,000 tons. At present, the spot price difference of domestic soybean palm oil has widened, and the price-performance ratio of palm oil has appeared. After the temperature rises, palm oil consumption has rebounded from a low level. Last week, the spot transaction of palm oil improved, and the import volume and consumption in June were basically the same. It is expected that the inventory will remain at a low level and the accumulation time will be postponed to July.
To sum up, at present, palm oil producing areas have entered a period of increasing production. In June, Indonesia lowered export taxes and fees, and the oil price difference between Indian horse hair and palm oil further narrowed. The export of horse palm is facing competition from Indonesian traders, and the export prospects are weakening, maintaining the expectation of increasing production and accumulating stocks. Domestic palm oil import profit improved, the purchase volume increased, and domestic palm oil inventory entered the bottoming stage. However, North American soybeans and Canadian rapeseed are nearing the end of sowing, and the unstable weather factors in the growth stage still have a premium support for oil products. Combined with the emotional disturbance of the Fed’s expected interest rate cut, it is expected that palm oil prices will be relatively firm and will maintain a high volatility trend in the short term. (Author: Huishang Futures)