Recently, due to the sharp rise in crude oil and horse palms, palm oil has emerged from the unilateral repair market.
According to customs statistics, China's palm oil imports in September were 612,607.17 tons, an increase of 102.4% month-on-month and 26.2% year-on-year, and the import volume hit a new high of this year.
Why has palm oil imports soared recently? What impact will it have on the market?
The main reasons why domestic palm oil imports have changed from the previous period to climbing to a historical high are: on the one hand, Indonesian has repeatedly reduced taxes and exempted special export taxes, actively concessions and promotions, import profit has been revealed, and traders' purchasing enthusiasm has increased; on the other hand, domestic consumption sentiment has recovered, and the widening of the soybean-palm price gap has also enhanced the attractiveness of the replacement of palm oil demand.
Domestic palm oil imports continued to be low in the first half of this year, and tight supply has led to the pattern of "low inventory and high basis" always with the market. Indonesia actively restricted exports and prices continued to be strong. From the third quarter of 2021 to the first quarter of 2022, palm oil import profits continued to invert, and the enthusiasm for buying ships was not high, resulting in a continued sluggish domestic palm oil imports from the beginning of 2022 to June, and the average monthly import of edible palm oil was once below 100,000 tons. As the import profit window opened in mid-May, Indonesia restarted exports, international palm oil prices were under pressure and declined, and the number of ship buying increased. Since July, palm oil arrivals began to rebound.
Currently, the supply at home and abroad is relatively loose, which will limit the upward space in the short term. MPOA data shows that horse brown production increased by 7.45% month-on-month on the first 20 months of October, while exports showed signs of fatigue. Exports fell by more than 3% month-on-month on the first 25 months of October. Based on the overall situation, inventory is expected to continue to accumulate to more than 2.5 million tons in October. In addition, India officially closed Diwali from October 24 to 26, and purchasing interest is expected to weaken. The domestic arrivals in October and November continued to be normal, with an estimated 450,000 tonnes and 500,000 tons respectively, and inventory continued to increase to a high of 628,400 tons. The palm oil futures basis has declined.
However, there are many stories in the origin, which also downplays the impact of palm oil import data on the market. On the one hand, the origin has entered the rainy season, especially Indonesia has experienced heavy rainfall, which has increased the market's concerns about the decline in palm oil production. On the other hand, after months of accelerated exports, GAPKI Indonesia's palm stocks fell to around 4 million tons in August, but the transfer of inventory does not mean disappearance, and the corresponding Indian and Chinese palm oil stocks rose sharply.
looks forward to the future market, Indonesia's palm oil exports increased beyond expectations in August, and the inventory pressure was significantly alleviated. In November, palm oil will start seasonal production cuts in the production area, and the labor shortage has not been eradicated, which may support the quotations in the production area. Considering that the arrival of soybeans in Hong Kong in October is still relatively low, and the South American drought in November may bring new benefits, there is a certain room for speculation in the later period. At the same time, Indonesia's exemption from Levy is about to expire. Against the backdrop of inventory sales exceeding expectations and concerns about production cuts caused by heavy rains, Levy may resume as scheduled in November, boosting prices from the cost side. Looking at the market, palm oil broke through the 60-day line and 8,000 point mark last week, and continued to rise above 8,300, and then stepped back to the 60-day line and rose again, and is now under pressure around 8,300. Palm oil does not have the basis for continuing to rise in the short term. On the one hand, from the indicators, the peak of holdings is constantly declining, and the upward momentum is declining; on the other hand, heavy rains in the production area have more temporary impacts on palm oil, which has little impact on the overall output of palm trees, and even helps the growth of palm trees. Finally, the domestic epidemic is showing a trend of blooming everywhere. Although the control is relatively short-term, it has a significant impact on travel, which in turn affects consumption demand. In terms of operating
, palm oil will still fluctuate strongly in the short term, and there will still be strong support near the 60-day line below, operating in the 8000-8350 range.
