Futures Daily
Yesterday, the three major domestic oils and fats were red across the board, and the adjustment of the first two days did not reverse the rebound pattern of oils.
According to the MPOB report released on January 10, Malaysia's palm oil production and inventory reduction in December last year exceeded expectations, confirming the inventory inflection point in November last year, and accelerating the process of reducing inventory, palm oil stopped falling and rebounded. Coupled with the tension in the Red Sea, crude oil oscillation is strong, providing peripheral support for palm oil, and the disk can break through the upper edge of the low oscillation range. During this period, U.S. beans experienced the unexpected negative brought about by the USDA supply and demand report raising the 2023/2024 U.S. bean yield estimate, beans and vegetables performed averagely, meal was particularly weak, the price difference between Y2405 contract and P2405 contract shrank sharply by more than 300 yuan/ton, and vegetable oil also performed averagely. This week, affected by the increase in palm oil purchases in May, the P2405 contract was slightly under pressure, the spread between the Y2405 contract and the P2405 contract rebounded at a low level, and the spread between the P2405 contract and the P2409 contract showed a pullback. Soybean oil and vegetable oil performed slightly better due to the rebound of U.S. beans and the cross-variety price spread strategy of oil and fat.
Guo Wenwei, an oil analyst at Huishang Futures, told the Futures Daily reporter that the domestic oil inventory has continued to decline recently, and the oil mills have taken the initiative to reduce the start-up crushing due to the impact of soybean meal expansion, and the holiday stocking has stimulated transactions, resulting in a continuous decline in soybean oil inventory. According to data from Huiyi.com, as of January 23, the national soybean oil port inventory was 803,000 tons, down 48,000 tons from the same period last month, and the palm oil inventory fell to 876,000 tons due to the decrease in imports, down 134,000 tons month-on-month. The resonance of the weather production reduction of foreign oils and oilseeds and the decline in domestic inventories led to a collective rise in the oil sector.
Hu Xinge, an oil and oil analyst at Chang'an Futures, said that from the perspective of the international market, Malaysia, the main producer of palm oil, is in a seasonal production reduction cycle, with a monthly production reduction of more than expected, and inventories have also been reduced for two consecutive months. In addition, the decline in production continued to widen in the first half of January. On this basis, Malaysia and Indonesia have recently suffered heavy rainstorms, which has deepened the market's concerns about the domestic production of palm oil, and the main BMD palm oil futures contract has rebounded by nearly 400 ringgit/ton, providing strong cost support for the domestic oil market.
"From the perspective of exports, the shipping survey agency shows that from January 1 to 20, Malaysia's palm oil exports decreased by 2.7% month-on-month, and will continue to reduce production and go to the warehouse. Guo Wenwei said.
Domestically, Liu Ruijie, an oil analyst at Shandong Qisheng Futures, said that palm oil began to decline at a high level in December last year, and in view of the fact that there were fewer ships to buy in the first quarter, the basis stabilized and rebounded, and the P2405 contract and the P2409 contract maintained a positive pattern. With the strengthening of the disk, the purchase of ships in May gradually increased, and the P2405 contract was suppressed, but the main driver is still the production reduction and inventory reduction in the production area, and the medium and long-term expectations remain strong.
The reporter learned that due to the decrease in rainfall in Argentina since last week, and the weather forecast for the next two weeks of rainfall year-on-year, soil moisture may be exhausted, which is not conducive to soybean growth, and the excellent rate may decline at the end of this month. Due to the Red Sea attack, India's sunflower oil import schedule has been extended, freight rates have risen, and landed costs are higher than soybean oil, prompting Indian buyers to turn to purchasing more competitive vegetable oils, Argentine soybean oil prices have risen, and rapeseed in Europe and Canada has also continued to strengthen.
Hu Xinge analysis said, although the current South American harvest pattern is basically determined, the global soybean supply easing makes the soybean oil cost pressure significant, but the United States beans have continued to fall to the cost range nearby, with the digestion of the bearish and last week's strong crushing data and export sales data improved, the United States bean disk also gave some support, the early stage of the relative vegetable palm oil was the most seriously constrained soybean oil has also warmed up recently.
"In view of the loosening of soybean oil supply and demand, before the 2024/2025 U.S. soybean area is estimated to land, the pressure on U.S. beans is greater, and the rebound space is limited. Variety differentiation was easy to show that the oil was strong, the meal was weak, and the palm was strong. Liu Ruijie said that the recent increase in the production capacity of soybean oil and firewood and the rebound of short covering, the United States beans benefited from China's re-procurement and rebounded, and the weekly arrival of domestic soybeans fell at a high level, and many factors brought support to soybean products. For China, the arrival of soybeans may be passing the peak, and the spot of oilmeal is also showing signs of stocking, which is conducive to the subsequent basis to stabilize and rebound, and the soybean palm difference has also been repaired. The expectation of strong oil and various negative factors of the bean system has basically been realized, so that the U.S. bean has been effectively supported at 1200 cents / bushel. The domestic soybean arrivals in February and March are low, and the logic of the high level of oilmeal storage will be slowly pulled to the forefront, which will resonate with the reduction of palm oil production and storage in Southeast Asia.
In terms of rapeseed oil, there is no obvious contradiction between the annual supply and demand of rapeseed in the world. According to Liu Ruijie, the domestic rapeseed and rapeseed oil imports in November and December last year were more, resulting in high rapeseed oil inventories, rapeseed to ships fell in January this year, and there were not many follow-up ships, and the pressure on the supply and demand side was slightly reduced. The EU's 2024/2025 new crop production estimate has been revised downward, which has a positive impact on the bearish cash. Russian vegetable oil exports to China this year are estimated to be little changed compared with last year, but there is a mismatch between the structure before and after, the fourth quarter and the first quarter are estimated to be more, and the second and third quarters are expected to decline significantly, which will make the domestic vegetable oil show a loose and then tight pattern, and is currently experiencing a peak supply period, and it is expected that there will be a significant decline in the warehouse after March. Pay attention to the relevant estimates of new crop sowing production in major producing countries and the fluctuations of European vegetable oil brought about by the EU firewood policy.
Looking ahead, Hu Xinge believes that although the general pattern of loose global oil supply has not been reversed, the above marginal changes will dominate the logic in the short term, and the probability of strong oil oscillation before a large number of South American soybeans are listed. Pay attention to the sustainability of palm oil production areas, such as the change in production and exports, and the pace of domestic oil stocks.
In Liu Ruijie's view, the global soybean supply and demand in 2023/2024 will loosen, the planting area of US beans in 2024/2025 is expected to increase, and the overall operation range of the soybean system is expected to be low. Southeast Asia's palm oil is facing a six-month-long production reduction cycle due to seasonal and El Niño impacts, which supports global oils and fats. The loose annual supply of soybeans and the de-production of domestic pigs have put pressure on protein feed. On the whole, the first half of the year is more likely to be strong and weak.