Market uncertainty increases, oil Q4 trend is still biased strong

This week, oil and grease as a whole first after suppression, although the beginning of the week USDA and MPOB two partial more monthly report basically laid oil and grease medium-term strong trend pattern, but from the South American weather improvement and European epidemic emergency triggered by more cautious sentiment still make the latter half of the week to record a decline.

In the USDA monthly report after the drastic adjustment, North America positive theme has been mostly realized, the market began to focus more on South America. Brazil is 2 weeks behind normal levels of planting progress made the U.S. soybean management fund net long position rose to a high since 2016, is up to break history or down reversal, depending on the future of South American weather progress. However, unfortunately, the latest weather forecast shows that the next two weeks rainfall in Brazil will be significantly improved, is expected to accelerate the planting progress of the speculative funds to do more U.S. beans enthusiasm has subsided, and the formation of internal oil drag.

Europe's second epidemic is raging, the number of new cases in some countries has exceeded the first round of epidemics. With the UK, France and other countries epidemic prevention initiatives continue to escalate, the market's confidence in the recovery of demand was impacted, oil and grease then plunged, although the subsequent decline has been repaired, but before the epidemic is under better control, still can not rule out the possibility of late emotional repetition and weakening demand.

Although the market from the South American weather, La Niña, European epidemic, Indonesia B30 and other aspects of the uncertainty is expected to increase, is expected to make the oil market volatility, but in the three major oil and grease unilateral did not see an obvious short board, we still hold a relatively optimistic attitude towards the oil market. Only in the palm oil market price volatility is expected to be strong, short-term 01 soybean brown spread and oil meal ratio trend has not seen a clear trend direction, still need to wait for further guidance.