Home
>
News
>
Industry News
Industry News
The palm oil market is still expected to provide support for the oil and vegetable market
During the long holiday period from February 9th to 16th, despite CONAB lowering Brazil's soybean production forecast to below 150 million tons and MPOB's positive February report, the overseas oil and fat market continued to decline during the holiday due to significant easing of the US Bean 23/24 and 24/25 balance sheets. Among them, BMD crude palm oil fell by 1.38%, CBOT soybeans fell by 1.43%, and CBOT soybean oil fell by 3.08%.
In its report on the early morning of February 9th, USDA unexpectedly lowered its exports of US beans for the 23/24 fiscal year, increasing its carried over inventory to 315 million cattles, higher than the market average estimate. In addition, at the Agricultural Outlook Forum on February 15th, USDA predicted that the planting area of American soybeans for the 24/25 fiscal year would reach 87.5 million acres. Under the assumption of a yield of 52, even with a significant increase in crushing and exports compared to the same period last year, the carrying over inventory of American soybeans for the 24/25 fiscal year will still increase significantly to 435 million bushels, and the corresponding average price of American soybeans on farms will be significantly reduced to 1120 cents per bushel, putting significant pressure on CBOT soybean futures prices.
Against the backdrop of continued weakness in overseas oil and fat crops, we anticipate that there will be a certain demand to make up for losses in the post holiday market. However, as CBOT soybeans approach the cost line and South American soybean production may not be as optimistic, and the continued destocking of palm oil in Southeast Asia provides support, there may be limited room for further decline in oil and fat futures prices. The magnitude of the correction may only be around 1-2%, so it is not advisable to be overly bearish in the short term.
The US soybean balance sheet has become more relaxed, and the CBOT soybean futures price continues to be under pressure
The downward pressure on CBOT soybeans during the long holiday period mainly comes from the expected easing of the US soybean balance sheet, which is not only reflected in 2023/24, but also further extended to 2024/25. In the supply and demand report on the early morning of February 9th, based on the fact that the current export sales progress of American soybeans lags behind the export target, USDA lowered the estimated export of American soybeans for 2023/24 by 35 million to 1.72 billion cattles. With other projects remaining unchanged, the carried over inventory of American soybeans exceeded 300 million cattles to 315 million cattles, marking a shift towards a more relaxed supply and demand situation.
The USDA's reduction in export estimates for US beans for the 23/24 fiscal year is not unfounded. According to the export sales data of American soybeans, as of February 8, 2024, the cumulative export and unshipped volume of American soybeans in the current market is 38.81 million tons, which is about 9 million tons lower than the same period last year. The lag is much higher than the year-on-year decrease of 6.45 million tons in the export target of 1.755 billion cattles before the reduction. If the export sales progress of US beans cannot accelerate year-on-year in the later stage, the export target for US beans in the 23/24 fiscal year will still face pressure to be lowered to a range of 1.7 billion or even below, which will ensure that the carried over inventory of US beans remains stable at a relatively loose level above 300 million cattles.
At the Agricultural Outlook Forum on February 15th, based on the better planting income of American beans compared to American corn (2413, 5.00, 0.21%) in 2023, as well as the current high price ratio of around 2.5% between American bean 11 and American corn 12 contracts, USDA gave an estimate of 87.5 million acres of American bean planting area in 2024/25, which is higher than market estimates. Under the assumption of a yield of 52, even if it is expected that the crushing and export of American beans will increase significantly year-on-year in 2024/25, the corresponding carried over inventory will still increase significantly to a loose level of 435 million cattles.
Under the significant trend of supply easing, the US soybean futures price is approaching or even falling below the pressure of planting costs, which continues to put pressure on the CBOT soybean futures price in the second half of the week. According to USDA data calculations, the planting costs of American beans in 2023 and 2024 were around 1155 cents and 1118 cents respectively. Compared to the planting costs, USDA provides an average price of 1120 cents for American bean farms in 2024/25, which is in line with the trend of American bean prices approaching planting costs in the context of loose supply and demand.
CONAB estimates increase concerns about Brazil's production, while Argentina's production remains uncertain in the face of low rainfall
In contrast, the supply and demand situation of South American soybeans is not as severe as that of North America. Although USDA only slightly lowered its forecast for Brazil's new soybean production to 156 million tons in its early morning report on February 9th, which was lower than market expectations, it did not bring too optimistic sentiment towards South American production to the market. CONAB had already lowered its forecast for Brazil's new soybean production to nearly 6 million tons to 149.4 million tons in its report on February 8th, and USDA's adjustments to South American production estimates during abnormal weather are often seen as slow and lack authority.
Although more and more private institutions have lowered their estimates of Brazil's new soybean production to below 150 million tons, the addition of CONAB, an official institution, undoubtedly adds to the tense atmosphere in the market regarding Brazil's new soybean production. The expected year-on-year decline in Brazilian production, coupled with farmers' reluctance to sell soybeans, has led to a slight increase of 10 cents in the FOB markup for Brazilian soybeans from March to May during the long holiday, without the significant drop that the market was concerned about. This has provided some support for the soybean market against the backdrop of the weakening CBOT soybeans.
The support for legumes from South America is not limited to Brazil. As CBOT soybeans become closer to the cost of American bean cultivation, Argentina's less optimistic rainfall situation in the next week also brings some potential short covering opportunities for legumes in the future. In the past week, the main soybean producing areas in Argentina have generally experienced rainfall of 35-80mm, which has led to a significant improvement in soil moisture in the corresponding crop root zone. However, meteorological forecasts indicate an overall lack of rainfall in the main soybean producing areas of Argentina in the coming week. Against the backdrop of a less optimistic production situation in Brazil, the deterioration of soil moisture during the critical growth period of Argentine soybeans and its potential threat to yield may lead to further tension in the soybean market and may trigger some short covering behavior, which needs attention.
Overall, with the significant easing trend of the US soybean balance sheet in 2023/24 and 2024/25, the global soybean market is being suppressed by the weakening of CBOT soybeans or may not perform well overall. However, in the context of a worsening soybean production situation in South America, it is not ruled out that there may be a temporary rebound in prices. It is necessary to maintain a certain level of attention to the rhythm of price trends and not overly bearish in the short term.
MPOB's February report is positive, providing some support for the palm oil market
In addition to the production situation in South America, another bullish support for the oil and fat market during the long holiday period comes from palm oil. According to the MPOB monthly report, the production of horse palm in January was 1.4 million tons, a decrease of 9.59% compared to the previous month; Exports reached 1.35 million tons, a month on month decrease of 0.85%. Due to significantly better than expected exports, Ma Zong's inventory at the end of January decreased to 2.02 million tons, exceeding market expectations. The positive monthly report of MPOB triggered a rebound in BMD crude palm oil, which temporarily boosted the oil and fat market. In the coming months, as there is still a trend towards further depletion of horse palm inventory, we expect the palm oil market to continue to provide support for the oil and fat market.
However, in the current context of Argentina's soybean oil prices being inverted over Malaysia's palm oil, we anticipate that Malaysia's exports exceeding expectations in January will be difficult to sustain, which will weaken the palm oil rebound height caused by the positive MPOB report in February. The latest shipping agency data shows that Ma Zong's exports decreased by 4.32% -17.14% compared to the same period last month from February 1st to 15th. Although there were relatively more holidays, the fewer working days in February meant that the decline in exports for the entire month would not be too low.
For the production of horse palm, the actual production of 1.4 million tons in January was better than mainstream institutions' estimates, with a slight year-on-year increase of 1.57%. Although seasonal patterns suggest that horse palm production in February will continue to decline month on month, SPPOMA estimates that there will still be a significant decline in horse palm production for the first 15 days of February. With the easing of excessive rainfall in Southeast Asia, we expect that horse palm production in February is still expected to achieve year-on-year growth. Entering March, the production of horse palm has entered a seasonal growth period. Compared to the significant decline in horse palm production caused by floods from March to April last year, we expect a higher probability of year-on-year growth in production in the same period of 2024. In the absence of growth points in exports in the short and medium term, it is expected to slow down the seasonal destocking of horse palm in the following months, limiting the height of palm oil rebound.
In its report on the early morning of February 9th, USDA unexpectedly lowered its exports of US beans for the 23/24 fiscal year, increasing its carried over inventory to 315 million cattles, higher than the market average estimate. In addition, at the Agricultural Outlook Forum on February 15th, USDA predicted that the planting area of American soybeans for the 24/25 fiscal year would reach 87.5 million acres. Under the assumption of a yield of 52, even with a significant increase in crushing and exports compared to the same period last year, the carrying over inventory of American soybeans for the 24/25 fiscal year will still increase significantly to 435 million bushels, and the corresponding average price of American soybeans on farms will be significantly reduced to 1120 cents per bushel, putting significant pressure on CBOT soybean futures prices.
Against the backdrop of continued weakness in overseas oil and fat crops, we anticipate that there will be a certain demand to make up for losses in the post holiday market. However, as CBOT soybeans approach the cost line and South American soybean production may not be as optimistic, and the continued destocking of palm oil in Southeast Asia provides support, there may be limited room for further decline in oil and fat futures prices. The magnitude of the correction may only be around 1-2%, so it is not advisable to be overly bearish in the short term.
The US soybean balance sheet has become more relaxed, and the CBOT soybean futures price continues to be under pressure
The downward pressure on CBOT soybeans during the long holiday period mainly comes from the expected easing of the US soybean balance sheet, which is not only reflected in 2023/24, but also further extended to 2024/25. In the supply and demand report on the early morning of February 9th, based on the fact that the current export sales progress of American soybeans lags behind the export target, USDA lowered the estimated export of American soybeans for 2023/24 by 35 million to 1.72 billion cattles. With other projects remaining unchanged, the carried over inventory of American soybeans exceeded 300 million cattles to 315 million cattles, marking a shift towards a more relaxed supply and demand situation.
The USDA's reduction in export estimates for US beans for the 23/24 fiscal year is not unfounded. According to the export sales data of American soybeans, as of February 8, 2024, the cumulative export and unshipped volume of American soybeans in the current market is 38.81 million tons, which is about 9 million tons lower than the same period last year. The lag is much higher than the year-on-year decrease of 6.45 million tons in the export target of 1.755 billion cattles before the reduction. If the export sales progress of US beans cannot accelerate year-on-year in the later stage, the export target for US beans in the 23/24 fiscal year will still face pressure to be lowered to a range of 1.7 billion or even below, which will ensure that the carried over inventory of US beans remains stable at a relatively loose level above 300 million cattles.
At the Agricultural Outlook Forum on February 15th, based on the better planting income of American beans compared to American corn (2413, 5.00, 0.21%) in 2023, as well as the current high price ratio of around 2.5% between American bean 11 and American corn 12 contracts, USDA gave an estimate of 87.5 million acres of American bean planting area in 2024/25, which is higher than market estimates. Under the assumption of a yield of 52, even if it is expected that the crushing and export of American beans will increase significantly year-on-year in 2024/25, the corresponding carried over inventory will still increase significantly to a loose level of 435 million cattles.
Under the significant trend of supply easing, the US soybean futures price is approaching or even falling below the pressure of planting costs, which continues to put pressure on the CBOT soybean futures price in the second half of the week. According to USDA data calculations, the planting costs of American beans in 2023 and 2024 were around 1155 cents and 1118 cents respectively. Compared to the planting costs, USDA provides an average price of 1120 cents for American bean farms in 2024/25, which is in line with the trend of American bean prices approaching planting costs in the context of loose supply and demand.
CONAB estimates increase concerns about Brazil's production, while Argentina's production remains uncertain in the face of low rainfall
In contrast, the supply and demand situation of South American soybeans is not as severe as that of North America. Although USDA only slightly lowered its forecast for Brazil's new soybean production to 156 million tons in its early morning report on February 9th, which was lower than market expectations, it did not bring too optimistic sentiment towards South American production to the market. CONAB had already lowered its forecast for Brazil's new soybean production to nearly 6 million tons to 149.4 million tons in its report on February 8th, and USDA's adjustments to South American production estimates during abnormal weather are often seen as slow and lack authority.
Although more and more private institutions have lowered their estimates of Brazil's new soybean production to below 150 million tons, the addition of CONAB, an official institution, undoubtedly adds to the tense atmosphere in the market regarding Brazil's new soybean production. The expected year-on-year decline in Brazilian production, coupled with farmers' reluctance to sell soybeans, has led to a slight increase of 10 cents in the FOB markup for Brazilian soybeans from March to May during the long holiday, without the significant drop that the market was concerned about. This has provided some support for the soybean market against the backdrop of the weakening CBOT soybeans.
The support for legumes from South America is not limited to Brazil. As CBOT soybeans become closer to the cost of American bean cultivation, Argentina's less optimistic rainfall situation in the next week also brings some potential short covering opportunities for legumes in the future. In the past week, the main soybean producing areas in Argentina have generally experienced rainfall of 35-80mm, which has led to a significant improvement in soil moisture in the corresponding crop root zone. However, meteorological forecasts indicate an overall lack of rainfall in the main soybean producing areas of Argentina in the coming week. Against the backdrop of a less optimistic production situation in Brazil, the deterioration of soil moisture during the critical growth period of Argentine soybeans and its potential threat to yield may lead to further tension in the soybean market and may trigger some short covering behavior, which needs attention.
Overall, with the significant easing trend of the US soybean balance sheet in 2023/24 and 2024/25, the global soybean market is being suppressed by the weakening of CBOT soybeans or may not perform well overall. However, in the context of a worsening soybean production situation in South America, it is not ruled out that there may be a temporary rebound in prices. It is necessary to maintain a certain level of attention to the rhythm of price trends and not overly bearish in the short term.
MPOB's February report is positive, providing some support for the palm oil market
In addition to the production situation in South America, another bullish support for the oil and fat market during the long holiday period comes from palm oil. According to the MPOB monthly report, the production of horse palm in January was 1.4 million tons, a decrease of 9.59% compared to the previous month; Exports reached 1.35 million tons, a month on month decrease of 0.85%. Due to significantly better than expected exports, Ma Zong's inventory at the end of January decreased to 2.02 million tons, exceeding market expectations. The positive monthly report of MPOB triggered a rebound in BMD crude palm oil, which temporarily boosted the oil and fat market. In the coming months, as there is still a trend towards further depletion of horse palm inventory, we expect the palm oil market to continue to provide support for the oil and fat market.
However, in the current context of Argentina's soybean oil prices being inverted over Malaysia's palm oil, we anticipate that Malaysia's exports exceeding expectations in January will be difficult to sustain, which will weaken the palm oil rebound height caused by the positive MPOB report in February. The latest shipping agency data shows that Ma Zong's exports decreased by 4.32% -17.14% compared to the same period last month from February 1st to 15th. Although there were relatively more holidays, the fewer working days in February meant that the decline in exports for the entire month would not be too low.
For the production of horse palm, the actual production of 1.4 million tons in January was better than mainstream institutions' estimates, with a slight year-on-year increase of 1.57%. Although seasonal patterns suggest that horse palm production in February will continue to decline month on month, SPPOMA estimates that there will still be a significant decline in horse palm production for the first 15 days of February. With the easing of excessive rainfall in Southeast Asia, we expect that horse palm production in February is still expected to achieve year-on-year growth. Entering March, the production of horse palm has entered a seasonal growth period. Compared to the significant decline in horse palm production caused by floods from March to April last year, we expect a higher probability of year-on-year growth in production in the same period of 2024. In the absence of growth points in exports in the short and medium term, it is expected to slow down the seasonal destocking of horse palm in the following months, limiting the height of palm oil rebound.
Overall, against the backdrop of continued weakness in overseas oil and fat crops, we anticipate that there will be a certain demand to make up for losses in the post holiday market. However, as CBOT soybeans are approaching the cost line and South American soybean production may not be as optimistic, and the continued destocking of palm oil in Southeast Asia provides support, there may be limited room for further decline in oil and fat futures prices. The extent of the correction may only be around 1-2%, so it is not advisable to be overly bearish in the short term.
JIN DUN CHEMICAL has built a special (meth) acrylic monomer manufacturing base in ZHEJIANG province. This makes sure the stable supply of HEMA, HPMA, HEA, HPA, GMA with high level quality. Our special acrylate monomers are widely used for thermosetting acrylic resins, crosslinkable emulsion polymers, acrylate anaerobic adhesive, two-component acrylate adhesive, solvent acrylate adhesive, emulsion acrylate adhesive, paper finishing agent and painting acrylic resins in adhesive.We have also developed the new and special (meth) acrylic monomers and derivatives. Such as the fluorinated acrylate monomers, It can be widely used in coating leveling agent, paints, inks, photosensitive resins, optical materials, fiber treatment, modifier for plastic or rubber field. We are aiming to be the top supplier in the field of special acrylate monomers, to share our rich experience with better quality products and professional service.
