Ample Edible Oil Supply and Weak Demand Make Sustained Price Rallies Unlikely
Last week (October 19-23), influenced by the futures price trends of CBOT soybean oil and Bursa Malaysia palm oil, the domestic vegetable oil market showed wide-ranging fluctuations. As the current domestic vegetable oil supply is ample, the spot market has also entered the traditional off-season for demand after the holiday, and basis has declined somewhat. Last week
Last week (October 19-23), influenced by the futures price trends of CBOT soybean oil and Bursa Malaysia palm oil, the domestic vegetable oil market showed wide-ranging fluctuations. As the current domestic vegetable oil supply is ample, the spot market has also entered the traditional off-season for demand after the holiday, and basis has declined somewhat.
Last week, domestic spot soybean oil prices fell slightly, and the market entered the off-season for demand after the holiday. Market trading volume declined slightly from the previous week, which does not support a sustained upward price trend and brings adjustment pressure. In port areas, the ex-factory price of first-grade soybean oil was 5,700-5,900 yuan/tonne, down 0-50 yuan/tonne from the previous week. In Henan, oil mills quoted first-grade soybean oil at 5,850-6,050 yuan/tonne, basically flat from the previous week.
Analyzing the outlook, the bearish factors are: First, the current cost of imported soybean oil for November shipment is 80-90 yuan/tonne lower than the prices of rapeseed oil and soybean oil in domestic port areas, import profits have improved, and corporate purchases will increase. Second, Chinese firms have recently accelerated soybean purchasing, with arrivals currently estimated at 5.5 million tonnes in October, recovering to 7.5 million tonnes in November, and continuing to increase to 8 million tonnes in December. Fourth-quarter soybean imports are trending upward month on month. Third, monitoring data show that the arrival cost of soybeans over the next six months will remain at the historical low level of 2,800-3,050 yuan/tonne, and the support from raw material costs for downstream product prices is weakening. The bullish factors are: First, the market estimates October soybean imports at around 5.5 million tonnes, a decrease of 1.76 million tonnes from 7.26 million tonnes in September. Due to the phased decline in domestic soybean supply, some oil mills will suspend production, which will support domestic oil and meal prices. Second, September-October is the peak slaughter period, and after October the aquaculture off-season also begins, so domestic soybean meal demand will decline. The market is bearish on later soybean meal prices, and falling meal prices are favorable to oil prices, so the oil-to-meal ratio will continue to rise.
In summary, domestic soybean oil futures and spot prices have already priced in the right side of a U-shaped bottom. Domestic spot soybean oil prices are expected to continue fluctuating slightly around current levels next week, building momentum for further gains. In spot operations, stock up in moderate amounts on dips.
Last week, domestic spot rapeseed oil prices fell slightly. In the Yangtze River basin, the ex-factory price of fourth-grade rapeseed oil was 5,900-6,000 yuan/tonne, down 0-100 yuan/tonne from the previous week. In South China, the ex-factory price of fourth-grade rapeseed oil was 5,600-5,750 yuan/tonne, down 50-100 yuan/tonne from the previous week. Current domestic rapeseed oil supply is sufficient, while the market has entered the off-season for demand, so domestic rapeseed oil prices face considerable pressure.
Analyzing the outlook, the bearish factors are: First, the earlier rise in rapeseed oil prices was entirely driven by rising palm oil futures prices, and the current market has major differences over palm oil trends, which will inevitably affect domestic rapeseed oil futures and spot prices. Second, the current price spread between domestic and foreign rapeseed oil is 80-90 yuan/tonne, corporate import enthusiasm will increase, and fourth-quarter domestic rapeseed oil imports will rise. Third, before the next pair of holidays arrives, the domestic market is in the traditional off-season for demand, and with ample domestic rapeseed oil supply, no factor can support a sustained upward trend in rapeseed oil prices.
The bullish factors are: First, last week the duty-paid cost of Canadian rapeseed arriving in China was 3,455 yuan/tonne. Based on current spot prices of fourth-grade rapeseed oil and rapeseed meal, the theoretical crushing loss for oil mills in the southeast coastal region is 80 yuan/tonne. Hedging loss on the Zhengzhou exchange is 100 yuan/tonne. With cost support, rapeseed oil is a relatively resilient product. Second, domestic rapeseed oil futures and spot prices are already in the bottom range of the past decade. Although there is no upward momentum at present, downside space is also limited.
In summary, due to raw material cost factors, domestic rapeseed oil prices will remain relatively firm, but new-season imported rapeseed entering the Chinese market and expectations of increased rapeseed oil supply will also cap rebound space. In operations, it is still advisable to buy mainly as needed.
Last week, domestic spot palm oil prices fell slightly. Port prices for 24-degree palm oil were concentrated at 4,450-4,550 yuan/tonne, down 100 yuan/tonne from the previous week. The current cost of imported palm oil is above 4,900 yuan/tonne, far higher than the domestic port distribution price of palm oil. However, domestic palm oil inventories remain high and have risen sharply year on year, restraining palm oil prices.
Analyzing the outlook, the bearish factors are: First, after Bursa Malaysia experienced a sustained sharp rise for one month, there is a need for a correction, and from a technical perspective, the probability of Bursa Malaysia continuing downward next week is very high. A weakening Bursa Malaysia will drag down the Dalian palm oil trend. Second, a bumper US soybean harvest is a foregone conclusion, Brazil's soybean planting area is expected to rise further, and the arrival cost of domestic imported soybeans over the next six months will remain at historical lows. Soybean oil costs do not support a one-way trend in soybean oil and will be transmitted to palm oil. Third, in the third quarter, China's average monthly palm oil imports approached 600,000 tonnes, causing a significant rebound in palm oil inventories. As of last Thursday, palm oil inventories at major domestic ports had increased to 750,000 tonnes, up 50,000 tonnes from before the holiday and up 230,000 tonnes from the same period last year. Palm oil inventories are at a relatively high level, which will restrain domestic palm oil prices.
The bullish factors are: First, the current palm oil price shows an inverted spread of 280 yuan/tonne between domestic and overseas markets, imports are seriously loss-making, and fourth-quarter palm oil imports are expected to decline significantly from the third quarter, so domestic palm oil inventories will enter a downward cycle. Second, because El Nino caused dry weather in Indonesia, offsetting the positive impact of increased yields from mature oil palm trees, Indonesia has lowered next year's palm oil production, which is bullish for the medium- to long-term palm oil trend.
In summary, domestic spot palm oil prices are expected to continue falling slightly next week. In operations, spot purchases should still mainly be made as needed, and moderate stockpiling on dips is acceptable.
Last week, domestic spot soybean oil prices fell slightly, and the market entered the off-season for demand after the holiday. Market trading volume declined slightly from the previous week, which does not support a sustained upward price trend and brings adjustment pressure. In port areas, the ex-factory price of first-grade soybean oil was 5,700-5,900 yuan/tonne, down 0-50 yuan/tonne from the previous week. In Henan, oil mills quoted first-grade soybean oil at 5,850-6,050 yuan/tonne, basically flat from the previous week.
Analyzing the outlook, the bearish factors are: First, the current cost of imported soybean oil for November shipment is 80-90 yuan/tonne lower than the prices of rapeseed oil and soybean oil in domestic port areas, import profits have improved, and corporate purchases will increase. Second, Chinese firms have recently accelerated soybean purchasing, with arrivals currently estimated at 5.5 million tonnes in October, recovering to 7.5 million tonnes in November, and continuing to increase to 8 million tonnes in December. Fourth-quarter soybean imports are trending upward month on month. Third, monitoring data show that the arrival cost of soybeans over the next six months will remain at the historical low level of 2,800-3,050 yuan/tonne, and the support from raw material costs for downstream product prices is weakening. The bullish factors are: First, the market estimates October soybean imports at around 5.5 million tonnes, a decrease of 1.76 million tonnes from 7.26 million tonnes in September. Due to the phased decline in domestic soybean supply, some oil mills will suspend production, which will support domestic oil and meal prices. Second, September-October is the peak slaughter period, and after October the aquaculture off-season also begins, so domestic soybean meal demand will decline. The market is bearish on later soybean meal prices, and falling meal prices are favorable to oil prices, so the oil-to-meal ratio will continue to rise.
In summary, domestic soybean oil futures and spot prices have already priced in the right side of a U-shaped bottom. Domestic spot soybean oil prices are expected to continue fluctuating slightly around current levels next week, building momentum for further gains. In spot operations, stock up in moderate amounts on dips.
Last week, domestic spot rapeseed oil prices fell slightly. In the Yangtze River basin, the ex-factory price of fourth-grade rapeseed oil was 5,900-6,000 yuan/tonne, down 0-100 yuan/tonne from the previous week. In South China, the ex-factory price of fourth-grade rapeseed oil was 5,600-5,750 yuan/tonne, down 50-100 yuan/tonne from the previous week. Current domestic rapeseed oil supply is sufficient, while the market has entered the off-season for demand, so domestic rapeseed oil prices face considerable pressure.
Analyzing the outlook, the bearish factors are: First, the earlier rise in rapeseed oil prices was entirely driven by rising palm oil futures prices, and the current market has major differences over palm oil trends, which will inevitably affect domestic rapeseed oil futures and spot prices. Second, the current price spread between domestic and foreign rapeseed oil is 80-90 yuan/tonne, corporate import enthusiasm will increase, and fourth-quarter domestic rapeseed oil imports will rise. Third, before the next pair of holidays arrives, the domestic market is in the traditional off-season for demand, and with ample domestic rapeseed oil supply, no factor can support a sustained upward trend in rapeseed oil prices.
The bullish factors are: First, last week the duty-paid cost of Canadian rapeseed arriving in China was 3,455 yuan/tonne. Based on current spot prices of fourth-grade rapeseed oil and rapeseed meal, the theoretical crushing loss for oil mills in the southeast coastal region is 80 yuan/tonne. Hedging loss on the Zhengzhou exchange is 100 yuan/tonne. With cost support, rapeseed oil is a relatively resilient product. Second, domestic rapeseed oil futures and spot prices are already in the bottom range of the past decade. Although there is no upward momentum at present, downside space is also limited.
In summary, due to raw material cost factors, domestic rapeseed oil prices will remain relatively firm, but new-season imported rapeseed entering the Chinese market and expectations of increased rapeseed oil supply will also cap rebound space. In operations, it is still advisable to buy mainly as needed.
Last week, domestic spot palm oil prices fell slightly. Port prices for 24-degree palm oil were concentrated at 4,450-4,550 yuan/tonne, down 100 yuan/tonne from the previous week. The current cost of imported palm oil is above 4,900 yuan/tonne, far higher than the domestic port distribution price of palm oil. However, domestic palm oil inventories remain high and have risen sharply year on year, restraining palm oil prices.
Analyzing the outlook, the bearish factors are: First, after Bursa Malaysia experienced a sustained sharp rise for one month, there is a need for a correction, and from a technical perspective, the probability of Bursa Malaysia continuing downward next week is very high. A weakening Bursa Malaysia will drag down the Dalian palm oil trend. Second, a bumper US soybean harvest is a foregone conclusion, Brazil's soybean planting area is expected to rise further, and the arrival cost of domestic imported soybeans over the next six months will remain at historical lows. Soybean oil costs do not support a one-way trend in soybean oil and will be transmitted to palm oil. Third, in the third quarter, China's average monthly palm oil imports approached 600,000 tonnes, causing a significant rebound in palm oil inventories. As of last Thursday, palm oil inventories at major domestic ports had increased to 750,000 tonnes, up 50,000 tonnes from before the holiday and up 230,000 tonnes from the same period last year. Palm oil inventories are at a relatively high level, which will restrain domestic palm oil prices.
The bullish factors are: First, the current palm oil price shows an inverted spread of 280 yuan/tonne between domestic and overseas markets, imports are seriously loss-making, and fourth-quarter palm oil imports are expected to decline significantly from the third quarter, so domestic palm oil inventories will enter a downward cycle. Second, because El Nino caused dry weather in Indonesia, offsetting the positive impact of increased yields from mature oil palm trees, Indonesia has lowered next year's palm oil production, which is bullish for the medium- to long-term palm oil trend.
In summary, domestic spot palm oil prices are expected to continue falling slightly next week. In operations, spot purchases should still mainly be made as needed, and moderate stockpiling on dips is acceptable.