Traditional Peak Season Arrives, Palm Oil Prices Expected to Rise in China

April 14th, News

According to SpotCom data: In early April, the palm oil market in China fluctuated and fell. On April 1st, the average market price of palm oil was 9,750 CNY/ton, and on April 14th, the average market price of palm oil was 9,244 CNY/ton, a decrease of 5.19%.

The Main Factors Influencing Fluctuations in Palm Oil Prices

Bullish Factors

Fundamental support: Strengthened energy interconnectivity and escalated conflicts in the Middle East have pushed up crude oil prices. The biodiesel attributes of palm oil have become more prominent, leading to an increase in biodiesel premiums, which has directly boosted sentiment in the edible oils sector in China.

Supply is tight: The palm oil inventory at the end of March was 2.27 million tons, a decrease of 16.1% month-over-month. From April 1 to 10, Malaysia's palm oil export volume decreased by 42.6% to 56.7% month-over-month.

Policy Boost: The Indonesian B50 biodiesel program (to be implemented in July) is expected to tighten supply, coupled with the increase in export taxes to USD 148 per ton in April, which will further constrain tradable supply.

Demand Improves: In the second quarter, the catering industry in China enters the traditional peak season, and the demand for inventory replenishment in food processing is released, leading to a recovery in the rigid demand for oils.

Negative Factors

Market News: After prices broke through the 10,000 yuan mark, profit-taking and capital outflows triggered concentrated liquidation by long positions, tightening market liquidity and sparking a stampede-like sell-off. Throughout the month, both open interest and trading volume declined in tandem. Crude oil experienced a high-level pullback, driven by expectations of easing tensions in the Middle East, while the oils and fats sector followed suit and weakened, reflecting a weakening of energy-related support.

Supply Side: With rising expectations of increased production from major producing regions, Southeast Asia has entered its peak production season from April to October. In early April, Malaysia’s output rose by 15.63% month-on-month (according to SPPOMA), indicating a gradual easing of supply and capping upward price momentum. Moreover, with import profits inverted—meaning domestic prices exceed import costs—traders have shown little willingness to book ships, resulting in insufficient arrivals at ports and further suppressing spot prices.

Technical Level Forecast

Palm Oil Spot Market Analysis: As shown in the price trend chart of palm oil, the key indicator is that at the end of March, the 10-day moving average of palm oil crossed below the 20-day moving average. In early April, the 10-day moving average of palm oil crossed above the 20-day moving average. In early April, palm oil spot prices showed mixed movements, oscillating and trending downward. After the 10-day moving average crossed below the 20-day moving average on April 12, the probability of palm oil prices falling in the latter half of the month increased significantly.

Auxiliary Indicator: In early April, palm oil prices hit 10-day lows and 20-day lows, indicating oversold conditions over the past 10 and 20 days. This suggests that, in the long term, there is still room for palm oil prices to rise.

In summary: In late April, the fundamentals of palm oil in China remain a mix of bullish and bearish factors. The production areas are entering the increasing production cycle, and the futures market is unstable. The rigid demand for palm oil in China is increasing, leading to fluctuating prices.

From a technical perspective, it can be seen that in early April, the palm oil market in China was at a low level with limited room for decline. In late April, the palm oil market in China is expected to mainly fluctuate widely, with strong momentum for an increase. The price is forecasted to be between 9,200 CNY/ton and 9,700 CNY/ton.