SunSirs: External Factors May Boost Edible Oil Prices

Soybean Oil:

With the U.S. launching military strikes against Venezuela, the vegetable oil sector is expected to shw relative strength as crude oil prices gain momentum.

Currently, weather conditions in South American production areas remain normal. Expectations of a bumper harvest are weighing on international soybean prices, keeping CBOT soybean futures in a weak range-bound pattern. This week, the State Reserve continued domestic soybean auctions. Results showed high market participation, while the suspension of imported soybean auctions slightly eased supply-side pressure. However, domestic oil mills maintain high operating rates, and soybean oil inventory pressure persists. End-user consumption remains driven by essential demand, prolonging the oversupply pattern and limiting upward potential for soybean oil prices.

Palm Oil:

Malaysian inspection agency ITS data shows December palm oil exports fell 5.8% month-on-month. SPPOMA data indicates production declined 8.07% during the same period. Palm oil production is entering its seasonal decline. Currently, inventories remain elevated both at origin and in major consuming countries. Indonesia's reduction in crude palm oil export reference prices supports palm oil export demand.

Short-term focus: The impact of U.S. military action against Venezuela on crude oil markets may boost palm oil, but production region inventory pressure persists, likely capping palm oil's upside.

Rapeseed Oil:

Short-term focus is on crude oil's potential uplift for rapeseed oil. Shortages of imported rapeseed have driven sustained inventory drawdowns, while weak terminal purchasing activity has kept spot market trading subdued.

Current oil consumption demand shows few bright spots. Rapeseed oil faces a dual weakness in supply and demand, limiting substantial price momentum. Monitor developments in China-Canada trade relations and Australian rapeseed arrivals.

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