SunSirs: Agriculture: The Price of Palm Oil Rises Again and Grease Oil Sector Has New Trend

1. Price Trend

The palm oil commodity index on November 20 is 71.75, with an increase by 1.94 points from yesterday. It is 36.44% lower than the highest point at 112.88 on April 10, 2012 in the cycle, and is 39.21% higher than the lowest point at 51.54 on December 16, 2018 in the cycle (Note: The cycle refers to March 1, 2012 to the date).

On November 20, the soybean oil commodity index is 65.50, which is 1.46 points higher than yesterday. It is 34.83% lower than the highest point at 100.51 on September 12, 2011 in the cycle, and is 30.95% higher than the lowest point at 50.02 on December 18, 2018 in the cycle (Note: The cycle refers to September 1, 2011 to the date).

On November 20, the rapeseed oil commodity index is 78.15, with an increase by 0.44 points from yesterday. It is 30.75% lower than the highest point at 112.86 on September 23, 2012 in the cycle, and is 27.97% higher than the lowest point at 61.07 on December 27, 2018 in the cycle (Note: The cycle refers to March 1, 2012 to the date).

According to data from SunSirs, since November, affected by fluctuating price of palm oil, the grease oil sector has been fluctuated as well. Among them, palm oil has repeatedly experienced the roller coaster market, and it has dramatically risen and fallen. Under the influence of palm oil, soybean oil and rapeseed oil have followed the trend of palm oil, but they have a smoother slope. On November 20, Palm oil once again ushers in a big rise, with the average price of 5,670 RMB/ton, with a 6.58% increase from the beginning of the month. The average price of soybean oil is 6,966 RMB/ton, with a 2.81% increase from the beginning of the month. And the average price of rapeseed oil price is 7,870 RMB/ton, with a 1.03% increase from the beginning of the month.

2. Market Analysis

With the simulation from strong export of Malaysia’s palm oil, the price of grease oil sectors gets the first round of roller coaster at the beginning of the month.

In early November, data from a number of foreign institutions shows a strong demand for Malaysian palm oil exports in October. In such strong performance of demand data and with the support of good news, the Malaysian palm oil of external disk rises sharply by nearly 3%. Domestic palm oil has risen as follow. Under the surging price of palm oil, all types of grease oil sectors have an increase, confronted with the first round of rising price. Palm oil rises by nearly 4%, soybean oil rises by nearly 3%, and Rapeseed oil rises by 1%. On November 6, after such noticeable rise, the market calms down with the price of grease oil gradually calling back. Until November 8, palm oil falls by 1.88%, soybean oil falls by 1.88%, and rapeseed oil falls by 0.57%. The first round of increase ends.

Report and data brings much good news, which drives the grease oil sectors to open the second round of roller coaster market.

In November, the MPOB report and the USDA are report released. Palm oil production and inventories significantly reduce. The production cut has become reality while the amount exports increases significantly. Custom data shows that soybean imports greatly reduce. Under the stimulation of bullishness, palm oil leads the grease oil sector to stage a second round of bullish market. On November 11, the grease oil sector raises for two days, with palm oil rising by 3.16%, soybean oil rising by 1.87% and rapeseed oil rising by 0.7%. On November 13, the favorable factors are digested by the market, and the grease oil sector again falls within the market. Until November 18, the price of palm oil falls by beyond 3 points, soy oil falls by 2.67% and rapeseed oil falls by 1.85%.

Biodiesel policy supports the market and the grease oil sector opens the third round of increase

As per Indonesian news on November 20, the Indonesian Ministry of Energy has approved an additional 72,000 kiloliters of fatty acid methyl ester (FAME, based on palm oil) for the B30 comprehensive trial project. Indonesia plans to implement the B30 biodiesel blending project by 2020, forcing the blending of 30% palm oil into diesel fuel. The news is more favorable, which drives the grease oil sector crazy. The increase of palm oil stimulates the increase of soybean oil, indicating the third round of increase has begun. On November 20, palm oil rises by 4.54% from the beginning of the week, and soybean oil rises by 2.24% from the beginning of the week. Rapeseed oil rises by 0.83% from the beginning of the week.

3. Market Forecasting

Li Bing, an agricultural product analyst in Sunsirs believes that from the three rounds of the oil sector, it can be seen that the rise in grease oil is mainly affected by the surge in palm oil. The palm oil and biodiesel policy basically dominates the market. Furthermore, the price of palm oil is the key. Learnt from the situation of first two rounds that the price will first surge then have a decrease, it can be seen that today’s high-level price is hard to maintain. However, the grease oil is in the peak season of consumption, associated with the tight import of soybean, the price of grease oil will fluctuate at a high level even if it may face sideways. The price is easy to rise but hard to fall.

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