SunSirs: China Soybean Oil is Expected to Rise in 2024

According to the Commodity Analysis System of SunSirs, the soybean oil market in 2023 was not good, with a sharp decline in the first five months, with prices continuing to decline by over 25%, dropping to 7,088 RMB/ton. Starting from June, the soybean oil market has gradually rebounded. Due to the insufficient rebound height, there is still a certain distance from the annual peak of 9,712 RMB/ton on February 21, and the highest price in the second half of the year is only 9,036 RMB/ton.

According to the annual data of SunSirs for 5 years, the price of soybean oil in 2023 is in a middle position, lower than 2021 and 2022, and much higher than 2019 and 2020. The highest point in 2022 is at a historic high, reaching 12,680 RMB/ton, and the highest point in 2021 is also 10,670 RMB/ton. After the continuous record high of soybean oil from 2021 to 2022, in 2023, soybean oil prices began to decline and experienced a period of decline. In 2024, soybean oil prices may once again reach a new high!

Supply side: The main raw material for soybean oil is imported soybeans, and the quantity has been continuously increasing since 2015. In 2020, it exceeded 100 million tons for the first time. In 2021 and 2022, the quantity of imported soybeans was also 96.58 million tons, and 91.08 million tons, which were at a high level. However, the market trend of soybean oil in 2021 and 2022 was at a historical high and was not completely suppressed by the import of raw materials such as soybeans. The estimated import quantity of soybeans in 2023 is as high as 98 million tons, which is close to the quantity in 2021, but the market performance of soybean oil is not satisfactory. Therefore, from the perspective of supply, even if the imported soybean quantity in 2024 is still as high as 90 million tons, the impact on the soybean oil market is limited.

Futures: Futures can be said to be the main factor affecting the soybean oil market. According to the 2021-2023 SunSirs's current chart, the current trend of soybean oil is similar, with a linkage between futures and spot.

In the first quarter of 2021, there was a significant increase, followed by a high oscillation in the second quarter. In the third quarter, there was a significant increase, with the highest price appearing in the third quarter and a weak decline in the fourth quarter. In the first half of 2022, there were two rounds of roller coaster market trends, with the highest price appearing in the second quarter, oscillating in the third quarter, and a weak downward trend in the fourth quarter.

In 2023, the first quarter did not rise, the second quarter fell for two consecutive months, the third quarter was unable to rebound, and the fourth quarter saw a weak decline. From the three-year futures trend chart, it can be seen that the first and third quarters are highly likely to be the highest prices for the whole year. This is mainly due to the New Year's Day and Spring Festival in the first quarter, where soybean oil factories are undergoing centralized maintenance and supply is tight. The growth period of South American soybeans in the outer market has led to frequent bullish futures. The third quarter is the growth period for American beans, and favorable factors are also taking turns.

The upward trend of soybean oil market in 2024 is also likely to occur in the first quarter. Currently, the main production areas of imported soybeans are experiencing severe drought, with an estimated year-on-year decrease of 10.3% in production. The first quarter soybean harvest in South America is approaching, and if there is a significant reduction in production, it will benefit the soybean oil market, and soybean oil prices may hit the bottom and rebound to a high level. In the third quarter, we will enter the growth period of American beans, and the weather theme is still ongoing. There is still room for an increase in soybean oil.

Demand side: The overall pressure on the catering industry in 2021 and 2022 has led to a decline in prosperity. The global consumption demand in the oil and fat industry is poor, and the concentrated consumption in the domestic catering industry has significantly decreased, which is bearish for the soybean oil market. Although demand has a certain limiting effect on the soybean oil market, it has been driven by the futures market, and the soybean oil market has continued to rise in 2021 and 2022. In 2023, the tourism industry has improved, and the prosperity of the catering industry has rebounded. Demand has shown a certain degree of recovery, but due to the pressure of futures prices, the soybean oil market in 2023 is average. In 2024, the terminal catering industry is still gradually recovering.

According to agricultural product analysts from SunSirs, in 2021 and 2022, despite the poor economic conditions of the terminal catering industry, soybean oil still experienced a significant increase due to temporary supply shortages. In 2023, the soybean oil market has already experienced a decline.

In 2024, the main factors affecting the soybean oil market are bullish factors in the futures market. The expectation of reduced soybean production in Brazil has increased, while the supply and production of soybeans in South America have decreased. The external soybean futures market is expected to rise, and there is room for a significant increase in futures prices. In the second half of the year, there are still favorable factors for the planting and growth period of American beans. With the relatively stable quantity of imported soybeans on the supply side and the improvement of the catering industry on the demand side, futures have strong upward momentum, and the soybean oil market is expected to rise.

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