Port inventory accumulation of palm oil continues to adjust

The recent palm oil futures price continued to adjust, and the main 2301 contract fell below the 10-week average support, and the futures price ran below the 7,800 yuan/ton mark. From the basis point of view, among the three major oil varieties, rapeseed oil maintained a high basis difference, soybean oil fell to a high basis difference of 880, and palm oil's basis fell to 166. The base difference of palm oil continues to be under pressure and the support for prices has weakened significantly.

Since mid-November, the international soybean palm FOB spread has fallen from the historic high of $459 / ton, and as of November 15, the recent international soybean palm FOB spread has fallen to $391.51 / ton. Overall, the international soybean palm price spread is still at a historical high. From the point of view of price spread, the substitution advantage of palm oil for soybean oil is still prominent, which will support the consumption of international palm oil.

From the perspective of the domestic soybean palm price spread, the main 2301 spread of soybean oil-palm oil futures has continued to fall from the previous high of 1860 to 796 on November 11, and has rapidly expanded to near 1200 in the past week. The sharp fluctuations in the price spread of soybean palm reflect the accelerated pace of market funds entering and leaving, and also reflect the weak performance of palm oil under the dual pressure of inventory and basis. In contrast, soybean oil is affected by the combination of oil plant inventory reduction and soybean oil, and the trend is significantly stronger than palm oil.

The latest data released by SPPOMA show that on November 15, Malaysian palm oil production decreased by 5.43% quarter-on-quarter, Malaysian palm oil production entered the seasonal production reduction cycle, and the impact of La Nina on Southeast Asian palm oil production began to be reflected, adversely affecting short-term harvest, and will continue to the first quarter of 2023. In addition, labor shortages remain, and the accompanying worries about production cuts continue to rise.

From the perspective of palm oil exports, Malaysian palm oil export demand remains strong, but the export growth rate has slowed down. Shipping survey agencies ITS and SGS released data show that in the first 15 months of November, Malaysia's palm oil exports increased by 3.5% to 12.7%. From the perspective of another major palm oil producing country, the Indonesian Ministry of Trade announced an increase in export taxes in the second half of November and the restoration of special taxes on palm oil exports, which will weaken the export competitiveness of Indonesian palm oil, which will help Malaysia palm oil export demand to remain strong. In the future, Malaysia's palm oil export demand mainly depends on the import increase of major consumer countries, in addition, exchange rate factors will also have a certain impact.

At present, the domestic palm oil port inventory continues to accumulate substantially. As of the week of November 15, the domestic main port palm oil inventory climbed to 828,000 tons, a weekly increase of 13,000 tons, an increase of 201,000 tons from the previous month, an increase of 347,000 tons, an increase of 49.7% from the five-year average of 553,000 tons. At the same time, the continued accumulation of palm oil stocks is in sharp contrast to the destocking of soybean oil and canola oil.

As of November 21, the import duty paid cost of Malaysian palm oil in November 24 was 8409 yuan/ton, compared with the domestic spot price of 8110 yuan/ton, and the import loss was 299.92 yuan/ton. According to the plate profit point of view, the import cost of Malaysian palm oil in January 2023 is 8113 yuan/ton, compared with the domestic palm oil futures price of 7800 yuan/ton plate loss of 313 yuan/ton. With the seasonal weakening of palm oil consumption, the loss of imported palm oil has significantly reduced the import enthusiasm, and the domestic palm oil port inventory will still maintain a slow growth trend in the later period, and the accumulation speed will slow down. From the perspective of Chinese demand, import demand for palm oil still faces a downside risk.

At present, the cost-effective advantage of palm oil is still more prominent, which is conducive to the export of palm oil, and with the increase of Indonesia's export tax in the second half of November, the export price competitiveness of Indonesian palm oil has weakened. At the same time, the market began to pay attention to the production season and the palm oil production expectations under the influence of La Nina, and the concern about production cuts continued to rise. In addition, in the context of increased international energy price volatility, the bioenergy properties of palm oil are also concerned. The passing of the B40 road test in Indonesia also makes the market optimistic about palm oil biodiesel demand.

From the demand point of view, palm oil inventories in China and India have begun to accumulate significantly, and with the expansion of import losses, the port inventory accumulation rate of palm oil may slow down. At present, the domestic palm oil port inventory pressure continues to release, the basis is weakening, the domestic market supply and demand environment has significantly improved, putting pressure on the palm oil futures price to fall, and paying attention to the changes in domestic palm oil inventories in the later stage. From the Futures Gazette