July 17 news
According to Spotcom data: In early July, the palm oil market in China fluctuated widely with minor adjustments. On July 1, the average market price of palm oil was 9,098 CNY/ton, and on July 17, the average market price was 9,112 CNY/ton, an increase of 0.15%.
The main factors influencing the rise and fall of palm oil prices
Supply Side: According to the June report from the Malaysian Palm Oil Board (MPOB), Malaysia’s palm oil inventories have been accumulating for the third consecutive month, reaching 2.5441 million tons at the end of June—the highest level for the same period in recent years. July remains the traditional peak season for production increases, and high-frequency data indicate that output continued to grow month-on-month in early July. The market generally expects inventory accumulation to persist throughout July.
As of early July, China's palm oil commercial inventory has climbed to over 750,000 tons, showing a significant year-on-year increase. The spot basis has weakened, suppressing the upward space for prices.
Demand side: China’s palm oil is in the off-season for consumption, and the price spread between soybean oil and palm oil remains low, leading to terminal demand being replaced by soybean oil. Substitution pressure: China’s soybean oil stocks are simultaneously high, and its prices remain relatively low. The continued narrow price spread between soybean oil and palm oil has prompted food companies to prioritize purchasing soybean oil, thereby diverting demand away from palm oil.
Policy-wise: Indonesia officially implemented its B50 biodiesel policy on July 1, which is expected to generate an additional annual demand for palm oil of approximately 5.3 million tons. Although we are currently in a transitional phase and the short-term impact remains limited, this move has injected strong long-term bullish expectations into distant-month contracts.
technical level forecast
Palm Oil Spot Analysis: From the price trend chart of palm oil, key indicators show that on June 28th, the 10-day moving average of palm oil crossed below the 20-day moving average. By the end of July, the 10-day moving average crossed above the 20-day moving average, with the difference between the averages narrowing positively and the upward momentum slowing down. In early July, the spot market for palm oil showed a mixed trend with oscillating increases. It is expected that in late July, the price of palm oil will weaken and fall.
Auxiliary indicator: In early July, soybean meal prices were at the lower-middle level on the 10th, the median level on the 20th, and the median level again on the 30th, indicating that, in the long term, palm oil prices still have the potential to decline.
In summary: In late July, China's palm oil fundamentals remained predominantly bearish, with ample supply and weak demand, leading to a weakening market trend.
From a technical perspective, it can be seen that in early July, the palm oil market in China was at a medium to low level, with room for further decline. In late July, the overall upward trend of the palm oil market in China slowed down, mainly characterized by fluctuations, with prices expected to range between 9,000 CNY/ton and 9,200 CNY/ton.
