Affected by the expected increase in production, the futures price of BMD crude palm oil continued to fall, and domestic palm oil followed the trend of Malaysian palm oil and also hit a new low. Market participants said that it is necessary to pay attention to the short-term disturbance of the risk premium brought by geopolitical tensions in the Middle East to palm oil prices.
According to Liu Ruijie, an oil and fat analyst at Qisheng Futures, the quotation of palm oil producing areas in Southeast Asia peaked in stages on April 3, and then entered the oscillation stage after a slight decline. After the MPOB report landed on April 15th, the logical stage of Ramadan production reduction and increase was exhausted. BMD crude palm oil led the domestic palm oil to fall, accompanied by the sharp depreciation of Malaysian ringgit and Indonesian rupiah, and the decline of palm oil quoted in US dollars was further expanded. In addition, some institutions said that Malaysian palm oil inventories were prone to inflection points in April and May, and then there would be a period of increasing production and accumulating stocks, which suppressed the market enthusiasm of palm oil, and the producing areas took the initiative to lower prices to promote the exchange.
"At present, the seasonal palm oil production in Malaysia has begun to recover. However, due to the Ramadan Festival, the output growth in March was lower than the historical average, and the export exceeded expectations, resulting in a drop in palm oil inventory in Malaysia to 1.715 million tons, down 10.68% from the previous month." Guo Wenwei, an oil and fat analyst at Huishang Futures, told reporters that Malaysian palm oil stocks may not be loose for the time being in April. In the first half of April, due to the impact of Eid al-Fitr, palm oil production growth in the second half of the month is expected to turn from negative to positive, and the margin of supply and demand is expected to improve. The willingness to sell goods in the place of origin has increased, and the quotation of the place of origin has loosened.
In fact, the data of palm oil production and demand in Malaysia in the first half of April continued to show a decrease in production and an increase in demand. SPPOMA data show that the yield of palm oil in Malaysia decreased by 22.43% and the oil yield increased by 0.03 percentage point from 1 to 15. According to ITS data, Malaysia exported 905,515 tons of palm oil from April 1 to 20, and 821,820 tons in the same period in March.
According to Liu Ruijie’s analysis, due to the holiday of Eid al-Fitr, the overall palm oil production level in Southeast Asia is still expected to be low in April. On the demand side, due to the low inventory in Indonesia, Malaysia’s palm oil export market has obviously improved this year compared with the same period of last year, and even after Ramadan, the export from April 15 to 20 can still reach a high level of 54,000 tons per day, so the supply and demand situation is still tight, and it is expected that the inventory will still drop by 100,000-200,000 tons at the end of April.
"Previously, the price of palm oil continued to rise, which was driven by the high cost performance of soft oil. In the first quarter, major demand countries such as India reduced palm oil purchases and turned to vegetable oils such as beans and sunflower oil. Under the expectation that the output growth is less than the export, Malaysian palm oil maintained its expectation of going to the warehouse in April, but the inflection point at the bottom of the inventory is expected to appear in the second quarter during the year. " Liu Jinlu, an oil analyst at Guoyuan Futures, said.
Domestically, the reporter learned that the current import price of palm oil is high, and the domestic import profit continues to be sluggish. This year, the overall import volume of palm oil is low. According to customs data, China imported 162,700 tons of palm oil in March, an increase of 67.49% from the previous month and a decrease of 58.12% year-on-year. Liu Jinlu said that after Ramadan, with the decline in the quotation of the place of origin, the profit of palm oil in the distant month has been restored, and the long-term purchase of ships has increased. However, the reality of tight in recent months still exists. From the demand side, the recent fall in prices has led to a pick-up in spot transactions, but it is still mainly just needed. According to institutional data, as of the week of April 12, the commercial inventory of palm oil in key areas of the country was 514,990 tons, a decrease of 8.19% from the previous month and a decrease of 42.65% year-on-year, which was in a low position in the same period of history. It is expected that in the second quarter, with the recovery of the arrival volume in Hong Kong, the palm oil inventory will start the repair process.
"At present, the spot price difference of domestic soybean palm oil is upside down, which has led to a sharp reduction in palm oil consumption. The substitution of domestic packaged soybean oil for palm oil has increased significantly. However, large food enterprises have not completely changed the formula, palm oil is only needed, and the decline rate of palm oil inventory has slowed down. There will be an inflection point after May." Guo Wenwei said.
Looking forward to the market outlook, Guo Guowei suggested that driven by the expected increase in palm oil supply in the producing area and the pressure of selling goods at reduced prices in the producing area, Malaysian palm oil continued its callback trend, and domestic palm oil supply was expected to increase, following the downward trend of Malaysian palm oil oscillation, but we still need to pay attention to the short-term disturbance of risk premium brought by geopolitical risks.
In Liu Ruijie’s view, although there may be an inventory inflection point in May, it is difficult to effectively accumulate Malaysian palm oil inventory even if it bottoms out in the second quarter. The staged drought in the third quarter of last year may still adversely affect the output in the second quarter of this year. In the third quarter of this year, there will be a possible La Nina phenomenon, and if there is too much rainfall in advance during the seasonal high-yield period, the output may also be affected. On the whole, there are still hidden dangers in palm oil production in Southeast Asia, and the inventory levels in Indonesia and Malaysia are low this year, and the overall supply status is not loose, so the subsequent price center of gravity still has the potential to move up.
Liu Jinlu believes that on the whole, the supply side of the producing area is expected to grow, and the domestic market is playing a game between tight reality and loose expectation. At the same time, the sharp fluctuation of crude oil price brought by geopolitical risks has driven the disturbance of raw wood demand, and also caused some disturbance to palm oil in the internal and external markets.