content guide

0303 Settlement Quotes and Disk Review

New changes in supply and demand fundamentals

The essence of mainstream institutional opinion

External Linked Market Transmission Effect

0303 Settlement Quotes and Disk Review

Malaysian palm oil futures on Wednesday (March 4) failed to extend the previous three consecutive trading days of rising trend, closing slightly lower. By midday, the benchmark contract for May delivery on the Bursa Malaysia Derivatives Exchange finally closed at 4178 ringgit/ton, down 8 ringgit or 0.19% for the day. The overall disk showed a narrow range of fluctuations. The market was mainly affected by the weak performance of Chicago soybean oil futures and some bulls chose to take profits after the recent rally.

From the perspective of the intraday volatility range, the futures price peaked near the RM4,300/ton integer mark and then fell back, indicating that action can be weakened in the short term. A trader in Kuala Lumpur said after the close: "Today's crude palm oil futures are mainly following the weakness of Dalian and Chicago soybean oilprofit takingConsidering the current internationalcrude oil priceThe support is expected to fluctuate in the range of 4150 to 4300 ringgit/ton in the near future. "This view basically reflects the current market consensus on short-term trends.

New changes in supply and demand fundamentals

At the supply and demand level, the newly released survey data has provided new trading clues for the market. The results of a survey of plantations and traders by well-known institutions show that Malaysia'sPalm oil stocksIt is likely to fall for a second straight month and hit its lowest level in four months. This expectation is mainly based on a seasonal decline in production, the impact of which outweighs the bearish effect of the slowdown in exports during the same period. Usually in the first quarter, the main producers of palm oil enter the traditional low-yield season, and persistent rains and labor efficiency issues pose a material constraint on fruit picking.

At the same time, there were positive signs on the demand side. India's imports of palm oil rose 10.1 per cent month-on-month in February to a six-month high, according to data from five distributors. The core logic driving this growth is that the price spread of palm oil relative to sunflower and soybean oil has widened again, and its priceDiscount advantageOnce again, it has attracted Indian refiners to increase procurement and correspondingly reduce the import share of sunflower oil. As the world's largest buyer of vegetable oil, India's replenishment behavior has provided a solid demand support for the current market, and has also eased the market's concerns about high prices suppressing consumption to a certain extent.

The essence of mainstream institutional opinion

Market participants from different backgrounds gave their own interpretations of the future market trend. The core view of the above-mentioned Kuala Lumpur traders is that the current market mainly revolves aroundCompetitive greaseThe price comparison relationship unfolds, with particular attention to the guiding role of Chicago soybean oil. After the profit is digested, whether the price center can stabilize will depend oncrude oil priceThe degree of cooperation. In addition, some traders also refer toIEXSForeign exchange and other data platforms to comprehensively evaluate the impact of exchange rate fluctuations on export competitiveness.

From the perspective of fundamental research, the conclusion of "inventories fell to a four-month low" reached by well-known institutions through surveys is regarded by most analysts as a support basis for medium-term prices. Some industry analysts further pointed out that the final confirmation of February production data will determine the tone of sentiment in the market in early March. If the final data is in line with or even lower than the survey expectations, then the current price correction may only be a short pause in the process of rising.

In addition, some traders in Singapore mentioned that although there are signs of overbuying in the short term, the basis of the cash market remains firm, indicating that there is not much selling pressure from upstream suppliers. This suggests that industrial capital is relatively optimistic about the current supply and demand pattern and is not in a hurry to carry out large-scale hedging operations on the futures market. Some market participants are also accustomed to using channels such as IEXS foreign exchange to pay attention to macro capital flows to help judge changes in market sentiment.

External Linked Market Transmission Effect

The performance of the related market on Wednesday presented a certain complexity. First of all, in the big business, the most activeSoybean oil contractThe closing rose 0.46%, while the palm oil contract rose slightly by 0.22%. The volatility of the two in the session was relatively large, and both fell by nearly 0.5% in early trading. This shows that the bullish sentiment in the domestic oil market has not completely dissipated, but the divergence is widening.

In contrast, the CBOT soybean oil futures electronic session was weak, down 0.27%, directly putting pressure on the Malaysian market. Soybean oil is one of the anchors of global oil pricing, and its weakness will limit the upside imagination of palm oil.

It is worth noting that the crude oil market was volatile today, soaring as much as 3% during the session. Expectations of supply disruptions in the Middle East directly boosted the biodiesel concept. The market logic is that,crude oil priceThe rise will enhance the economics of palm oil as a biodiesel feedstock, thereby stimulating industrial consumption demand. Although palm oil did not strengthen in tandem with crude oil today, it was dragged down by soybean oil, but this deviation is usually difficult to sustain in the long run. In the next few trading days, ifcrude oil priceThe ability to maintain a high level may provide additional upward mobility for palm oil from the demand side of firewood, which is also the underlying reason why traders list crude oil as an important reference variable for short-term volatility ranges. Part of the view also comes from the continued attention to price analysis tools such as IEXS foreign exchange.

[Frequently Asked Questions]

Q: Does today's decline in palm oil mean the current rally is over?

A. Today's slight pullback is more of a technical correction than a trend reversal. In terms of driving factors, it is mainly the transmission of sentiment caused by the profit taking and the weakening of Chicago soybean oil. But in terms of fundamentals, the two core bulls of Malaysia's inventories falling to a four-month low and India's imports surging have not changed. Therefore, as long as international oil prices remain relatively high, the current shock consolidation is more likely to build up energy for the next wave of the market.

Q: What does the increase in Indian imports mean for the market?

A. Indian import data is an important bellwether for physical demand in Asia. February imports rose 10 per cent month-on-month and hit a six-month high, suggesting that buyers still accept the current price level after previous price increases, especially when palm oil is significantly discounted compared to soybean oil and sunflower oil. This helps to digest inventory pressures in major producing countries, providing support for origin quotes, and thus solidifying the bottom range of futures prices.

Q: Why should traders focus on the RM4,150 to RM4,300 range?

A: This range reflects the current balance of long and short market forces. Near the lower edge of RM4150 is the confirmation area after the previous platform breakthrough, and it is related tocrude oil priceThe support logic echoes; the upper 4300 ringgit is the high point of the recent rebound, and there is technical selling pressure. Traders believe that the price will repeatedly see in this range in search of a new directional break before the lack of new major news stimulus.

Question:crude oil priceWhy didn't the rise drive palm oil to strengthen simultaneously today?

Answer: This is a typical short-term market pricing bias.crude oil priceIt is a medium- to long-term logic that biodiesel demand is transmitted mainly to palm oil. In day trading, the market tends to prioritize the most immediate factor, namely the decline in CBOT soya oil. However, this divergence is often unsustainable. If international oil prices continue to rise, its cost-push effect will eventually be transmitted to the vegetable oil market through the profit of firewood blending, at which time palm oil will make up for it to repair the deviation.

Q: What are the key variables to keep an eye on in the coming week?

Answer: First, pay attention to the release of the official data of MPOB (Malaysian Palm Oil Board) in February to verify whether the inventory has fallen to a low level as indicated by the survey. Second, we need to observe the impact of the fluctuation of the exchange rate of the ringgit against the US dollar on the ringgit-denominated contract. Finally, pay close attention to the internationalcrude oil priceSustainability and the trend of Chicago soybean oil will determine whether palm oil can break out of the current volatility range and resume its upward trend. Some traders will also refer to data such as IEXS foreign exchange to track the impact of exchange rate changes on capital flows.