Weather Themes Remain; Palm Oil Futures Expected to Rise

May 14th, news:

According to SpotCom data: In early May, the palm oil market in China weakened, showing a fluctuating decline. On May 1st, the average market price of palm oil was 9,672 CNY/ton, and on May 13th, the average market price of palm oil was 9,322 CNY/ton, with a price decrease of 3.52%.

The main factors influencing the rise and fall of palm oil prices

On the supply side: Malaysia’s palm oil production in April reached 1,629,801 tons, an increase of 18.37% month-on-month. At the end of April, palm oil inventories rose by 1.71% month-on-month to 2.309 million tons, exceeding market expectations. Coupled with the onset of the seasonal peak-production period, this continues to signal a relaxed short-term supply situation, weighing on market sentiment.

Exports: From May 1 to 10, Malaysia’s palm oil export volume increased by 8.49% month-on-month; however, overall inventory pressure remains unresolved, limiting the support that exports can provide to prices.

On the demand side: China’s terminal consumption of palm oil has not shown any significant rebound. Demand in the catering and food-processing sectors remains stable, while traders are eager to offload their inventories. As a result, spot sales have slowed down, leading to a passive accumulation of inventories and further driving down spot prices.

In the international market, major importing countries such as India have shifted to purchasing soybean oil and sunflower oil due to the relatively high prices of palm oil, leading to a slight decrease in demand for palm oil imports.

Biofuel Policy Outlook: Indonesia plans to fully implement the B50 biodiesel policy by July 2026, which will significantly boost industrial demand for palm oil and, in the medium to long term, help ease supply pressures.

El Niño Weather Risk: The WMO forecasts that El Niño will officially establish itself from May to July, increasing the risk of drought in Southeast Asian production regions and heightening expectations of reduced palm oil yields. If the drought persists, it will provide medium-term support for prices.

Technical level forecast

Palm oil spot market analysis: From the price trend chart of palm oil, key indicators show that at the end of April, the 10-day moving average of palm oil crossed above the 20-day moving average, and at the beginning of May, the 10-day moving average crossed below the 20-day moving average. At the beginning of May, the spot market for palm oil showed mixed trends, with oscillating declines. It is expected that there will still be room for further declines in the palm oil market by late May in China.

Auxiliary Indicator: In early May, palm oil prices hit their lowest point on the 10th, their lowest point on the 20th, and their median level on the 30th, indicating that, in the long term, there is still room for palm oil prices to rise.

In summary: In early May, the fundamental situation of palm oil in China was still a mix of bullish and bearish factors, with the origin entering the production increase cycle, and futures prices fluctuating. The rigid demand for palm oil in China was average, and the market trend was oscillating downward. From a technical perspective, it can be seen that in early May, the palm oil market was at a low level, with limited room for further decline. In late May, the overall trend of the palm oil market is expected to be wide-ranging oscillation, with strong momentum for an increase, and prices are estimated to be between 9300 CNY/ton and 9700 CNY/ton.