Zhuo Chuang Information： Supply expectation continues to reduce palm oil gains.

　　Xinhua Finance, Beijing, January 26 th The palm oil market generally fluctuated in January, which was basically in line with expectations. At present, in addition to the international situation, the production reduction period of major producing countries and the support of domestic destocking, the palm oil market has also increased the weather factors in the producing areas. Recently, the heavy rainfall in Southeast Asia has affected the normal production of palm oil, and the supply is expected to decrease or continue to support the market to rise after the Spring Festival.The grid was higher than the previous month, and in March, due to the listing of Brazilian soybeans, the upside was suppressed.

　　Supply concerns support palm oil price rebound

　　In January, the palm oil market fluctuated and rose. Apart from the sustained high consolidation of international crude oil, the supply and demand of palm oil itself was also one of the main driving factors for this rise. At present, the main producing areas of palm oil are in the period of production reduction, and heavy rain will affect normal production. As a result, on January 23, Malay BMD palm oilFutures rose more than 1%, reaching a two-month high. Due to the influence of high cost, the domestic spot price followed higher. As of January 23, the port’s 24-degree palm oil closed at 7619 yuan/ton, up 509 yuan/ton or 7.16% from the beginning of the month. The monthly average price is 7309 yuan/ton, which is 1.95% higher than that of the previous month by 140 yuan/ton. As can be seen from Figure 1, the domestic palm oil market price is consistent with the trend of horse palm, so if horse palm continues to rise, it will greatly support the domestic palm oil market.

　　Palm oil production reduction supports the market

　　In December 2023, the output and inventory of horse palm fell more than expected, of which the output in December was 1.55 million tons, down 13.31% from the previous month. Inventory was 2.29 million tons, down 4.64% from the previous month. In addition, January is also in the period of production reduction, and it is widely expected that Malay production and inventory will continue to decline in January. In addition, El Niñ o weather may continue to affect the first quarter. On the whole, Malay palm oil production is reduced and the market is profitable.

　　In addition, the demand for palm oil from raw wood may increase in 2024. GAPKI of Indonesia predicts that Indonesia’s palm oil export this year may decrease by about 4% compared with 2023. Indonesian biologyAccording to the Manufacturers Association, Indonesia has allocated 13.41 million kiloliters of raw wood for compulsory blending this year, slightly higher than the allocation of 13.15 million kiloliters in 2023. These indicate that Indonesia’s external supply of palm oil will decrease, thus supporting the palm oil market to rise.

　　The import volume of major demand countries supports the market to rise.

　　India is the world’s largest importer of edible oil, and more than two-thirds of its total domestic demand needs to be imported. Because of its low cost and fast transportation, India prefers palm oil. Under normal circumstances, its imports account for about 50% of the total edible oil imports. After India’s import volume hit a three-month high in November 2023, it continued to increase its import volume in December. According to Indian SEA data, palm oil imports in December were 894,200 tons, up 2.84% from November, and its imports in December reached a four-month high.

　　China is the fourth largest palm oil demand country in the world, and totally depends on imports, so the domestic import volume and port inventory level reflect the domestic supply situation. According to the data released by the General Administration of Customs of China, the import of palm liquid oil in December 2023 was 290,000 tons, down 33.12% from November and 32.81% from the same period last year. Although the import volume decreased in December 2023, it was still at the middle level of monthly import volume in the past two years, and the annual import volume increased by 27.13% year-on-year.

　　Worried that supply will continue to decrease, prices in the first quarter or gains can be expected.

　　Internationally, January-March coincides with the traditional production reduction cycle of palm oil in Southeast Asia, and the rainfall in January is too large, which is not conducive to the harvest of fresh fruit strings and will affect the normal production of palm oil. It is expected that the external supply of palm oil in major producing countries will continue to decrease. Among them, the output of Malay palm oil in the first quarter is expected to be 5 million tons, and the export volume is expected to be 3.7 million tons, down 5.25% and 11.84% respectively compared with the previous quarter; Indonesia’s output in the first quarter is expected to be 11 million tons, and its export volume is expected to be 7.8 million tons, which is 8.33% and 3.70% lower than the forecast data in the previous quarter respectively. In addition, the international geopolitical situation, El Niñ o weather and the Fed’s interest rate cut plan may boost commodities to some extent, and palm oil will be supported higher. However, the listing of Brazilian soybeans is the main risk factor, because the first three factors are uncertain. Based on comprehensive analysis, it is expected that the listing of Brazilian soybeans will have a certain inhibitory effect on the rising space of soybean oil and palm oil.

　　As a major demand country of palm oil, India is allowed to reduce the import tariff of edible oil in 2024/25 (April to March of the following year) and extend the original time by one year, which is conducive to increasing palm oil imports. Judging from the demand in China, January is the Spring Festival stocking, and February-March is the post-holiday replenishment stage. There is a certain demand in the market, but the degree of demand recovery needs attention; Due to the high international cost, the domestic enthusiasm for buying ships is weak, and the number of arrivals in January-March is limited. With the gradual recovery of demand, the domestic port inventory is expected to continue to decline, thus supporting the market.

　　Palm oil prices will continue to rise under the expectation that India will increase palm oil imports and the overall supply will continue to decrease. February is the Spring Festival in China, with a small number of people going out, limited increase in rigid demand, and the price may remain at a high level; Market demand will gradually recover in March, but it is still necessary to pay attention to the recovery and the impact of Brazilian soybean listing on the oil market. On the whole, palm oil prices are expected to rise overall in the first quarter. (Palm oil marketZhang Lanlan)