Author | Shi Lihong, Futures Research and Development Department of CITIC Construction Investment Corporation

Time of completion of this report | April 14, 2024

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With the end of the Ramadan theme of palm oil, driven by the weakening of palm oil, the grease has been out of sight for a long time this week. The sharp drop in domestic palm oil demand caused its short-term inventory to rise instead of falling, and the willingness of the bulls to approach the month decreased significantly, and the funds continued to move positions from 05 to 09, bringing a significant drop in the P59 price gap. In the expectation of a recovery in production, the price of palm oil in the production area after Eid al-Fitr was loose, and eight September palm oil were purchased domestically on Friday, which significantly restricted the momentum of the 09p rally.

The USDA monthly report in the early hours of Friday morning was neutral and empty, and CBOT soybeans continued to be under pressure below 1200 cents. The report downgraded the 24-year export forecast of US Bean 23max to 1.7 billion bu, but did not raise the crushing forecast, resulting in a higher-than-expected carry-over inventory of US Bean to 3%.Bestgamestoplayandearncrypto.40 million cattails. In addition, USDA did not adjust South American soybean production forecasts as expected, while the market had expected a bigger decline in Brazilian production than in Argentina.

From a fundamental point of view, the momentum of the current oil rise has been lacking, and there is a risk of stagflation falling in the near future. However, the potential short-term geopolitical disruption to prices still needs attention. An article in the Wall Street Journal on Friday titled "Iran is expected to attack Israel in the next two days" stirred up traders' nerves, and short covering once triggered a sharp rise in the dollar, gold, crude oil and commodities on Friday night. Although gold, crude oil and US stocks fell sharply in the middle of the night, Iran officially launched drone and missile attacks on Israel in the early hours of Sunday, and Israel announced an unprecedented response to the Iranian attack. we need to beware of the unilateral rising risks brought about by the escalation of the Palestinian-Israeli conflict, and we can focus on the opportunity to repair the price difference between oil and oil in the distant month and to reduce the oil-to-meal ratio periodically.

First, the Ramadan theme hype ends, palm oil continues to rise and the kinetic energy weakens

The seasonal production reduction that began in November last year, superimposed by the floods from the end of last year to the beginning of this year, and the Ramadan disturbance from March to April this year, the biased production performance of palm oil in the producing area led to the continuous removal of palm oil, which provided significant support to the palm oil quotation in the producing area. Strong quotations from producing areas have been further transmitted to China through the continued upside-down of import profits, and tight supply in recent months has greatly boosted the trend of palm oil in the past two months and led to a rebound in oil prices from their previous lows.

However, after the price has risen to such an extent, the market has mostly digested the tight supply in recent months brought about by the continuous withdrawal of storage at home and abroad, under the background of the substantial collapse of demand for palm oil at home and abroad, with the impact of Ramadan on palm oil production receded and the seasonal production growth period arrived, the marginal improvement in supply weakened the strong foundation of palm oil prices, and the quotations in the producing areas, especially in distant months, appeared obvious loosening after Eid al-Fitr. Domestic long-month ship purchase growth weakens 09 palm oil rising momentum.

Under the upside-down spot soybean palm price difference, the domestic demand for palm oil has been compressed to rigid, which has greatly slowed down the momentum of palm oil to continue to go to the warehouse. At present, the domestic commercial purchase of palm oil from April to May is slightly more than 300000 tons, which is higher than the rigid demand level of palm oil in the corresponding period. My agricultural products network data show that as of April 5, domestic palm oil stocks have increased slightly by 31300 tons to 561000 tons. Instead of falling, domestic palm oil stocks have significantly reduced the willingness of long funds to receive goods. Palm oil 05 contract positions fell sharply, which represents a sharp decline in the willingness of funds to continue to empty.

However, the high P59 spread still gives the bulls some advantages in moving their positions to the distant moon, with recent positions in palm oil 09 contracts rising rapidly to record highs at the same time. In spite of this, we believe that the long basis of 09 palm oil brought about by disk discount, upside-down import profits and low inventory is not very solid, and the production of late production, inventory recovery and price loosening are the core factors that really affect the late trend of palm oil.

At present, the market has basically digested the positive that the inventory of horse palm fell further below 1.8 million tons at the end of March, and the quotation of palm oil in the producing area after Eid al-Fitr has been significantly loosened. If the MPOB monthly report fails to give a better-than-expected performance, or the horse palm production shows a better-than-expected performance, it may lead to further loosening of the quotation from the place of origin and transmission to the country through the domestic import profit window. At that time, the long basis of low domestic palm oil inventory, loss of import profits and high discount may face a turning point. This week we have seen a significant improvement in palm oil import profits and a large number of new ship purchases in September. If late production continues to recover and prices continue to fall, the long basis of palm oil 09 contracts will be significantly shaken.

Second, the USDA monthly report does not bring good, short-and medium-term soybean oil rising momentum is insufficient.

While palm oil continues to rise with insufficient kinetic energy, we expect that the lack of bean market will make it difficult for soybean oil to form a rotated upward effect.

In the early hours of Friday morning, USDA reported neutral short in April, and CBOT soybeans continued to be under pressure below 1200 cents. The report downgraded the 24-year export forecast of US Bean 23gram to 1.7 billion bu, but did not raise the crushing forecast, causing the carry-over inventory of US Bean to rise to 340 million PS. In addition, USDA did not adjust South American soybean production forecasts as expected, while the market had expected a bigger decline in Brazilian production than in Argentina.

Since the Spring Festival, the rising water of South American soybeans has rebounded significantly from its low level, but it still has certain advantages over the quotation of beautiful beans, which leads to the continued slow progress of export sales of Midea Dou 23max in 24 years. As a result, USDA lowered its export target to 1.7 billion cattails in its April report. As of April 4, 2024, the cumulative annual export and unloaded volume of Meidou in the current market is 40.85 million tons, lagging behind 9.28 million tons compared with the same period last year, still higher than the export target of 7.94 million tons, or leading to a further reduction in the export target in the later stage.

By contrast, soyabean crushing performed better, with soyabean crushing in NOPA member units rising 6.5 per cent year-on-year between September and February this year, higher than the USDA's annual growth target of 4 per cent, leading to a potential increase in the later crushing target. Generally speaking, there is a decline in exports but an increase in squeeze in Meidou 23max in 24 years, and the carry-over inventory has a higher probability of falling above 300 million cattail, corresponding to the loose supply and demand pattern, which continues to restrict the short-and medium-term performance of CBOT soybean.

Although under the background of the decline of total crop acreage in the United States and more than 60% probability of turning to La Nina in the Pacific Ocean from June to August, there are speculation opportunities for the acreage and per unit yield of Meidou in 25 years, but at the current time when Meidou is in the news vacuum period, CBOT soybeans can hardly find momentum to rise in the short and medium term. At a time when Argentina's high-yielding new soybeans are gradually on the market, the South American soybean discount is also facing the risk of stagflation as a whole, which is expected to bring weaker pressure on domestic soybean import costs, superimposed by the late arrival and crushing of high domestic soybeans, and the arrival of the inflection point of soybean oil inventory is not conducive to its rotational rise.

On the whole, the significant slowdown in the removal of domestic palm oil depots has greatly weakened the willingness of funds to empty in recent months. With the end of Eid al-Fitr, the disturbance at the palm oil production side has weakened along with the seasonal increase in production, and the recent production quotation has been loosened and triggered new domestic boat purchases, which is not conducive to palm oil prices continuing to rise. Two recent USDA reports did not bring further positive. Short-and medium-term CBOT soybeans are under pressure below 1200 cents. The listing of new beans in Argentina and the weakening of Chinese purchases restrict the South American discount trend. In the later stage of the recovery of domestic soybean crushing and soybean oil accumulation, it is difficult for soybean oil to continue to drive oil rise, and the risk of oil stagflation is expected to increase. However, short-term geopolitical factors may bring great disturbance, so we need to guard against the unilateral rising risk caused by the escalation of the Palestinian-Israeli conflict, and we can pay attention to the opportunity of repairing the price difference between oil and oil and the periodic decline of oil-to-meal ratio in the distant month.

Researcher: Shi Lihong

Futures trading consulting information: Z0014570

Tel: 023-81157334