Business community： palm oil slides in 2023, or a turning point in 2024.
Business news on January 05
According to the commodity market analysis system of the business community, in 2023, the external market was dominated by negative interest, and the terminal demand was sluggish. The domestic palm oil market continued to slide, and the overall weak oscillation dominated the whole year, with a drop of over 14%. At the beginning of the year, the average market price of palm oil was 8356 yuan/ton. On December 31st, the average market price of palm oil was 7120 yuan/ton, down 14.79%. The highest price in the whole year is only 8406 yuan/ton, which is more than 7800 yuan/ton compared with the record high price of palm oil of 16240 yuan/ton in 2022.
In 2023, the domestic palm oil market as a whole can be divided into two stages. In the first half of the year, the domestic palm oil market rose and fell, and after several rounds of ups and downs, the overall oscillation fell by 9.31%. In the second half of the year, domestic palm oil also oscillated and fell mainly, and the market continued to rise and fall, with an overall decline of 6.04%.
According to the annual comparison chart of domestic palm oil from 2019 to 2023, it can be seen that palm oil is in a middle market in 2023, which is higher than that in 2019 and 2020, and there is a certain gap compared with that in 2021 and 2023. Especially in the first half of 2022, palm oil can be said to be at a historical high, and its price has hit record highs. It began to decline in the second half of the year and fell to the same level in 2021 in the fourth quarter.
In 2024, can palm oil get rid of the drag, bottom out and usher in a turning point? Let’s analyze it together.
Supply side:Domestic palm oil mainly depends on imports, and the import quantity of palm oil has a great influence on the market. Since 2018, domestic palm oil imports have been rising. In 2019, domestic palm oil imports were the highest, reaching 5.61 million. In 2020 and 2021, the import volume was similar, with more than 4.6 million tons. In 2022, domestic palm oil imports were the least, only 3.41 million tons. Domestic palm oil is estimated to be 4.6 million tons in 2023, which is at a high level. Domestic palm oil will remain high in 2024.
Because the domestic palm oil import volume dropped sharply in 2022, the market also reached a record high. In 2020 and 2023, palm oil imports were high, and the market performance was poor and weak. Although the import volume of palm oil was relatively high in 2021, palm oil, as a substitute for soybean oil, was supported by the power cut and shutdown of soybean oil plants, and the market continued to rise. Since 2019, domestic imports have been increasing, and the low level in 2022 is caused by special events. In 2024, normally, domestic palm oil imports will remain at a high level, which will suppress the palm oil market.
futuresThe spot trend of palm oil in China is relatively close. Because of its dependence on imports, the spot market fluctuates more strongly. Because the main producers of palm oil are Malaysia and Indonesia, the palm oil production in Malaysia and Indonesia also affects the trend of futures market. Palm oil production is seasonal. March-October is the increase cycle of palm oil, and November-February is the decrease cycle.
It can be seen from the comparison chart between 2021 and 2023 that in 2021, the spot market of palm oil continued to rise, with the highest increase in the third quarter, which was a cycle of increasing production. Due to the power outage of soybean oil plants in that year, there was a gap in palm oil supply, and the spot market of palm oil continued to rise. In 2022, the production reduction cycle of Malay palm oil in the first quarter, coupled with the continuous decline in palm oil imports, the spot market in the future has been rising all the way to the second quarter, with the highest price exceeding 16,200 yuan/ton, a record high. In the third quarter, it entered the palm oil production cycle, which was dominated by negative interest, and the current market was weak and fell to 2023. In 2023, the supply of palm oil was loose, the import volume was high, and the current market continued to be weak. In 2023, the domestic palm oil market has fallen to the bottom. In 2024, the overall palm oil market is better than that in 2023. Malaysia’s palm oil production is still cyclical, with long and short factors intertwined, and the futures spot trend is relatively consistent, with the overall oscillation rising.
Demand side:In 2021 and 2022, the catering industry as a whole was under pressure, the prosperity declined, the global consumption demand of oil and fat industry was poor, and the centralized consumption of domestic catering industry was greatly reduced, which was bad for palm oil market. In 2021, the demand for palm oil will have a certain limiting effect on the palm oil market, and the soybean oil market will continue to rise in 2021 and 2022. In 2023, the tourism industry improved, the catering industry prospered, and the demand showed a certain degree of recovery. However, the import volume of palm oil remained high, and the palm oil market continued to be weak and consolidated in 2023. In 2024, with the continuous recovery of tourism, concentrated consumption increased, the terminal catering industry was supported by rigid demand, and the demand side was favorable for palm oil.
Li Bing, an agricultural product analyst of the business community, believes that the palm oil market has fallen to a low point in 2023 and continues to weaken. In 2024, the supply pressure is still there, palm oil production in major producing countries is bullish, and demand is picking up. In the long-short game, there is still a turning point in the palm oil market in 2024, and the overall market will be higher than that in 2023, which will usher in a big rise in the palm oil production reduction cycle, and the first half will be better than the second half.
(Article Source: Business Society)