July 30th News
According to SpotCom data: In July, the palm oil market in China showed mixed trends, mainly characterized by fluctuating increases. At the beginning of the month, the average market price of palm oil was 9,098 CNY/ton, and by July 30th, the average market price of palm oil had risen to 9,264 CNY/ton, an increase of 1.82%.
The main factors influencing the July palm oil market are as follows:
On the supply side: According to SPPOMA’s high-frequency data for July, production from July 1st to 25th declined only slightly by 0.11% month-on-month, remaining within the year’s overall production expansion cycle. Export data showed significant divergence: SGS’s exports for the first 25 days fell sharply by 17.93% month-on-month, and inventory accumulation pressure at producing regions continues to persist.
As of July 24, China's national palm oil commercial inventory reached 839,100 tons, up from 802,400 tons in mid-July, a significant increase on a month-to-month basis, and a 35.68% increase year-over-year, reaching a new high for the same period in the past three years. In July, which is traditionally a low season for oil consumption, the demand from the catering and food processing sectors was weak, with daily average transactions at oil mills only 500 tons, continuing to decline month-over-month. With high soybean oil inventories and low soybean-palm oil price differences, downstream users have been substituting soybean oil for palm oil in large quantities, further dragging down palm oil sales.
On the demand side: In July, with high temperatures prevailing, China is in the off-season for oil and fat consumption, resulting in subdued demand. Indonesia, one of the major producing countries, has advanced the transition period for its B50 biodiesel policy and emphasized that this move will not lead to a reduction in total exports. In the long run, this is expected to boost China's industrial demand by approximately 2 to 3 million tons.
Palm oil spot market analysis: From the price trend chart of palm oil, key indicators show that on July 13, the 10-day moving average of palm oil crossed above the 20-day moving average, with the 10-day moving average remaining above the 20-day. By the end of July, the positive difference between the averages narrowed, indicating a deceleration in the upward trend.
Auxiliary indicator: As of the end of July, palm oil prices were at the median for the 10-day period, the median for the 20-day period, and the upper-middle range for the 30-day period. This indicates that, in the long term, there is still room for palm oil prices to decline.
In summary, at the beginning of August, the palm oil fundamentals in China are mainly bearish, as the production areas enter the peak production cycle, and there are factors that could lead to a decline in futures prices. The weak demand for palm oil in China lacks the momentum for price increases. From a technical perspective, it can be seen that at the end of July, the palm oil market was at a medium level, with room for a decline. At the beginning of August, the overall trend of the palm oil market is expected to fluctuate downward, with prices forecasted to be between 9,000 CNY/ton and 9,200 CNY/ton.
