Palm oil "leading" oil oil will continue the bull market pattern?

After the National Day, the palm oil index broke through again upwards, reaching a maximum of 9992 yuan / ton, only one step away from the 10,000 yuan mark.

Yesterday afternoon, the domestic futures market closed, and the oil and fat plate rose against the trend. Among them, palm oil rose more than 3%, vegetable oil, soybean oil rose more than 2%.

In the outer market, the Chicago Board of Trade (CBOT) soybean futures market prices closed lower this morning as international crude oil futures prices weakened and soybean export sales data fell short of market expectations. As of the close, soybean futures fell 2-5.5 cents/bushel, and bursa Malaysia Derivatives Exchange crude palm oil futures fell for the second consecutive trading day.

On the news side, the weekly export sales report released by the USDA shows that in the week ended October 21, the US 2021/2022 soybean net export sales were 1.1834 million tons, which was lower than market expectations. Statistics Canada said Canadian rapeseed crushing was 778,000 tonnes in September 2021, up 116,000 tonnes from 662,000 tonnes in August, down 0.9 per cent from the same period-ago and 4.7 per cent higher than the three-year average.

Some market participants told reporters that due to the impact of policy, coal futures have fallen all the way, the market panic is heavy, the futures price of oil varieties has picked up after falling for two consecutive days, and there are more capital outflows, relatively speaking, palm oil has performed strongly. Palm oil currently plays a central role in oils and fats and needs to be focused on.

"Recently, oil and fat have fluctuated greatly, mainly because the overall commodity market is depressed, and it is difficult for oil and fat to stand alone. Yesterday's oil and fat sector pulled up, on the one hand, supported by fundamentals, the market short basis is insufficient; on the other hand, it was boosted by international oil prices. In addition, in the context of the strict investigation of speculative funds by regulators, the repeated macro news has also increased the volatility of the disk. Wu Xiaojie, an analyst at Zhongzhou Futures, told the Futures Daily reporter.

Zhang Cuiping, an oil and grease analyst at Merya Futures, said that the recent regulatory policies on coal chemical industry have been frequent, and commodities have been collectively under pressure, and oils and fats have also been dragged down. However, the overall strength of oil and fat fundamentals are strong, and the downward space in the future market should be limited.

In terms of spot, spot prices fell synchronously with futures, Tianjin and Shandong 24 degrees palm oil reported 10100 yuan / ton down 300 yuan / ton, Guangzhou 24 degree palm oil reported 9910 yuan / ton fell 340 yuan / ton, Jiangsu 24 degree palm oil reported 10070 yuan / ton fell 340 yuan / ton.

"From the perspective of output, the main production areas are about to enter a seasonal production reduction period, the labor shortage problem has not been solved for a long time, and the supply in the later period is more pessimistic." A recurrence of the La Niña climate could affect the picking and transportation of oil palm plantations and soybean production in South America, triggering a new round of weather hype in the market and further pushing up palm oil prices. Jianxin Futures oil and grease analyst Yu Lanlan said.

Yu Lanlan said that from the demand side, India's reduction of vegetable oil tariff policy may stimulate additional procurement, and the market's increased demand for winter heating will also exacerbate the global energy crisis, indirectly increasing vegetable oil prices. There are also some bearish markets, one is that the new season harvest of US beans and sunflower seeds is good, and the supply is expected to increase more; the second is that the palm oil futures price is close to the historical extreme, and some investors choose to take profits; third, the price pressure caused by inflation in various countries may bring regulatory risks and the global epidemic situation.

"In addition, the recent slow arrival of ships in China has led to the cessation of palm oil inventories and another decline, the total inventory of oil and fat is low, and the consumption of the peak season in the fourth quarter will further aggravate the pressure on oil and fat supply." Malaysia plans to impose a nationwide B20 firewood programme by the end of next year, which will also further support its domestic consumer demand. Zhang Cuiping added.

Zhang Cuiping believes that in the short term, affected by the overall trend of commodities, palm oil oscillation adjustment, volatility intensified, short-term should pay attention to the support effect of the lower edge of the range; in the medium term, waiting for the tight supply and the potential benefits brought by the peak demand season to give the entry opportunity.

For the late trend of palm oil, Wu Xiaojie believes that supported by fundamentals, the bull market pattern is difficult to change. First of all, the core contradiction supporting the disk surface horse palm supply shortage short-term unsolved, missing the high yield season after the introduction of 32,000 foreign workers to improve production seems to be too late, is expected to recover production in October is limited; MPOB is also pessimistic about horse palm expectations, is expected to drop to 18 million tons in 2021, ending stocks are only 1.7 million tons, at a historically low level, the improvement of the supply pattern of production may not be reflected until the second quarter of next year. Secondly, other oil and fat fundamentals will continue to be strong, soybean oil has entered the seasonal destocking stage, it is expected that the inventory will fall below 750,000 tons at the end of the year; the fundamentals of vegetable oil are more optimistic, the pattern of rapeseed production reduction has been determined, East China has been going to the warehouse for several consecutive weeks, the supply tightening is expected to be strengthened, favored by funds, and the anti-fall resistance of the disk surface is outstanding. Finally, based on the interference of macro factors, short-term oil and fat will appear a phased correction, the current attitude of the entire market has turned cautious, the demand for capital hedging has risen, and it is necessary to be vigilant against the chain decline caused by the tightening of liquidity.

"Overall, the global oil and fat market has shifted from tight supply to improved supply, but inventory accumulation is still very slow. The fourth quarter is the peak season for oil and fat consumption, with low oil and fat inventories at home and abroad, a slow recovery in output, and a global energy shortage in winter that is difficult to alleviate. In the medium term, oil and fat will be easy to rise and fall, and run strongly. Yu Lanlan said.

This article originated from Futures Daily