June 29th News
According to Spotcom data: In June, the palm oil market saw a mix of increases and decreases, with a predominant trend of fluctuating downward, and a price decrease of over 3%. At the beginning of the month, the average market price for palm oil in China was 9,520 CNY/ton. By June 29th, the average market price for palm oil in China had dropped to 9,216 CNY/ton, a decrease of 3.19%.
The main factors influencing the June palm oil market are as follows:
On the supply side: In June, Malaysia entered its traditional peak palm oil production season. From the 1st to the 25th of June, output increased significantly by 16.92% month-on-month. From June 1st to 25th, Malaysia’s palm oil exports rose by 10.6% month-on-month.
On the demand side: On July 1, Indonesia’s mandatory biodiesel blending policy for B50 officially took effect, raising the proportion of palm oil blended into diesel to 50%. This will add 2 to 3 million tons of new demand for palm oil-based biodiesel over the year. As a result, a significant portion of palm oil supply will shift toward domestic consumption, putting long-term downward pressure on global palm oil export volumes. Coupled with Indonesia’s tightening of regulations on palm oil export qualifications, expectations of a contraction in future supply have become clear, thereby supporting stronger performance in distant-month contracts.
China: June is traditionally the off-season for oil and fat consumption. Demand in the catering and food-processing sectors remains subdued, with end-users purchasing only on an as-needed basis and refraining from large-scale stockpiling. As a result, spot transactions have been sluggish, which is the key factor behind the weaker performance of near-month contracts.
Inventory: As of June 19, the nationwide commercial inventory of palm oil stood at 669,100 tons, with a slight weekly decrease of 13,400 tons. However, this figure is significantly higher—up 87% year-on-year—placing it at a historically high level for the same period. The ample inventory is likely to continue suppressing the rebound in China’s near-month prices over the long term. Import profits are inverted, and the volume of incoming shipments remains limited.
Palm oil spot analysis: From the price trend chart of palm oil, key indicators show that on May 13th, the 10-day moving average of palm oil crossed below the 20-day moving average, with the 10-day moving average being below the 20-day moving average, and the difference between the averages narrowed inversely, indicating a deceleration in the decline. At the end of May, the 10-day moving average crossed above the 20-day moving average, with the 10-day moving average above the 20-day moving average, and the difference between the averages narrowed positively, indicating a deceleration in the rise. At the beginning of June, the 10-day moving average of palm oil crossed below the 20-day moving average, and by the end of the month, the 10-day moving average and the 20-day moving average were very close, with the difference between the averages narrowing inversely, indicating a deceleration in the rise.
Auxiliary indicators: As of the end of June, palm oil prices were at the mid-to-high level over the 10-day period, the mid-to-high level over the 20-day period, and the mid-to-low level over the 30-day period. This suggests that, in the long term, there is still room for palm oil prices to decline. In summary, at the beginning of July, China’s palm oil market was characterized by a tug-of-war between bullish and bearish factors. Production regions have entered a phase of increased output, creating downward pressure on futures prices. Meanwhile, rigid demand for palm oil in China has been declining, leading to an overall market trend dominated by volatile declines.
From a technical perspective, it can be seen that the palm oil market in China is at a medium to high level at the end of June, with room for decline. At the beginning of July, the overall palm oil market in China is expected to fluctuate and fall, with prices forecasted to be between 9,000 CNY/ton and 9,200 CNY/ton.
