Palm Oil Prices in January Steadily Rise

January 26th, News

According to the commodity market analysis system: In January, the palm oil market showed a recovery, with prices fluctuating upwards, increasing by more than 5%. At the beginning of the month, the average market price of palm oil in China was 8,564 CNY/ton. By January 26th, the average market price of palm oil in China had risen to 9,000 CNY/ton, an increase of 5.09%.

The main factors affecting the January palm oil market in China are as follows:

Supply Side: Malaysia’s palm oil production is estimated to have declined by 14.43% from January 1 to 20. From January 1 to 25, palm oil export volume reached 1,099,033 tons, an increase of 7.97% compared to the 1,017,897 tons exported during the same period last month. The main producing region, Malaysia, is currently in a production-reduction cycle. Specifically, palm oil production in January fell month-on-month, while export data rose—overall, these factors are bullish and are supporting palm oil prices.

Futures: Due to the support from the external market's Malaysian palm oil prices, China's palm oil futures were boosted. As of January 26, the main contract for palm oil on the Dalian Commodity Exchange closed at 9,092 CNY/ton, a single-day increase of 176 CNY/ton, up 7.11% from early January. With the rise in futures prices, the spot prices of palm oil in China also followed suit.

On the demand side: As the Spring Festival approaches, end-users are starting to stock up on edible oils, and traders remain enthusiastic about purchasing palm oil. With rigid demand on the rise, palm oil sales volumes have increased, and transactions are picking up again. Driven by stronger demand, China’s spot palm oil market is steadily moving higher.

Palm oil analysts believe: After the Spring Festival, the rigid demand from the terminal market in China will decrease, and with the positive factors exhausted, the palm oil market may lack sustained momentum for further increases and could mainly trend towards a weak decline.