As Futures Daily reported on February 12th, affected by COVID-19, the national vegetable oil was sharply lower last week. Then the panic feeling cools down, with the degree of decrease of vegetable oil alleviated.
As of February 7, the dominated national soybean oil contracts opened at a low price and went higher in 2005, with the highest price of 6262 RMB / ton and the lowest price of 5982 RMB / ton. The weekly closing price was 6236 RMB / ton, down 3.17% per week.
In terms of spot goods, as of February 7, Shandong first class soybean oil offered 6800 RMB / ton, down 220 RMB / ton compared with 7020 RMB / ton before the Spring Festival; Guangdong first class soybean oil trader offered 6720 RMB / ton.
In terms of transaction, soybean oil spot and soybean meal spot show the phenomenon of ice and fire. The soybean meal transaction is very strong, while oil market is relatively low.
In terms of inventory, the national commercial soybean oil inventory was 897000 tons last Friday, 848000 tons in the previous week, 903000 tons in the same period last month, 1310000 tons in the same period last year, and the five-year average was 1.1 million tons.
In terms of factory, the national oil industry affected by COVID-19, the national oil plant start-up rate is relatively low last week. In normal years, the power on rate can be restored to about 40% in the first week after the Spring Festival holiday, and it can be restored to normal two weeks after the Spring Festival.
Last week, the operating rate of oil plants was only about 22%. 790000 tons of soybeans, 620000 tons of meal and 150000 tons of oil were squeezed nationwide. There is a sudden drop in the consumption of middle packaging oil during the epidemic period (the consumption of middle packaging oil is mainly used for restaurant industry). Therefore, although the squeezing volume is low, the soybean oil inventory has increased. It indicates that the demand is greatly affected by the epidemic.
In addition, last week's oil panic was more from the outside market, especially the sharp decline in Malaysian palm oil.
As the leader of vegetable oil sector, Malaysian palm oil led the oil price to break through continuously year ago. The main driving force for the rise was the reduction of production in Malaysia at the supply side and the increase of biodiesel policy at the demand side.
The main logic of the sharp correction during the Spring Festival is as follows:
First, Malaysia's production reduction has been fully reflected by the market. While Indonesia's production reduction, which is eagerly awaited by the market, has not been reflected in the supply and demand data, which has depressed market confidence.
Second, with investors' pessimistic expectation on the macro-economy, international crude oil prices have fallen rapidly, which has widened the price gap between crude oil and biodiesel costs. The market is skeptical of the sustainability of biodiesel policy.
Third, the price of palm oil rose rapidly in the early stage, but the increase of soybean oil, sunflower oil and other oils was relatively small, resulting in the rapid reduction of the price difference between palm oil and other oils. And the end consumption turned to other oil varieties, resulting in the rapid decline of palm oil demand.
Overall, the consumption of vegetable is directly suppressed by the outbreak of COVID-19, and panic can hardly be repaired in the short term.
However, we should see that the epidemic has inhibited the consumption of vegetable, but it has also reduced soybean crush, and the supply and demand of soybean oil have weakened at the same time.
In the medium term, the author is optimistic about vegetable oil prices, mainly driven by palm oil. First of all, Malaysia's palm oil production reduction pattern has been continuously verified. In January, Malaysia's palm oil production was 1.17 million tons, a year-on-year decrease of about 22%. Meanwhile, Indonesia's weather during June September 2019 was not ideal, and the precipitation was low, and the impact on palm oil production will be reflected in March April. Therefore, the story of production reduction in Southeast Asia may continue in the future.
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