Introduction: palm oil has entered a seasonal production increase cycle, but geopolitical factors have greatly affected the export of Ukrainian sunflower oil and rapeseed oil, and the demand has shifted to soybean oil and palm oil. As the short-term demand increment is greater than the supply growth, the low levels of horse palm inventory and American bean inventory continue to decline. It is difficult to alleviate the short-term shortage of bulk oil supply before the export of Ukrainian vegetable oil recovers. In the medium and long term, palm oil production will gradually increase in the later stage; The planting area of American beans will increase in advance, and the balance of supply and demand of American beans will turn to loose according to the trend per unit yield.

1、 Malaysia’s palm oil storage decreased for five consecutive months

Palm oil has entered a seasonal production increase cycle since March. According to the MPOB report released on April 11, Malaysia’s palm oil production in March was 1.141 million tons, an increase of 24.07% month on month and a year-on-year decrease of 0.85%, higher than the previous estimate of 1.32-1.34 million tons by the three major institutions. The seasonal increase of horse palm oil production has been confirmed. And the subsequent labor tension in Malaysia is expected to be further solved. In order to alleviate the adverse impact of labor shortage, Malaysia announced to reopen the border from April 1. However, considering the limited willingness of labor to go out to work during Ramadan, it is expected that the labor relief time may occur from May to June. Malaysian officials expect 32000 foreign workers to enter Malaysian plantations through special permits in May or June. According to the data of meoa (Malaysian plantation owners association), the productivity of each harvester is 1.5 tons of FFB per day. Based on the oil production rate of 20% of crude palm oil and an average of 23 working days in a month, the potential crude palm oil output can be released 6.9 tons / person per month. For every 1000 employees, the monthly crude palm oil output is expected to increase by 6900 tons. The output increment brought by 32000 workers in May was 220800 tons. In May, the 10-year average output was 1.56 million tons, and the output of palm oil will gradually recover. Malaysia’s palm oil production is expected to reach 19 million tons in 2022, up 4.94% from 18.105 million tons in 2021.

The tension of geopolitical factors has hindered the export of Ukrainian sunflower oil and rapeseed oil by sea. Previously, the oil world estimated that the export loss of vegetable oil in the Black Sea region was 1.2 million tons / month. At present, Ukraine can transport sunflower oil to neighbouring countries by truck or train, but buyers have doubts about the reliability of supply and quality. India, the European Union and other major demand countries have shifted their demand for vegetable oil to palm oil and soybean oil, greatly increasing the short-term demand for palm oil and soybean oil.

On the whole, palm oil is in the trend of double increase in supply and demand, but the reduction of import volume and the exceeding expectation on the demand side have frustrated the expectation of the reconstruction of Malaysian palm oil inventory again. The MPOB report on April 11 showed that the final inventory of Malaysian palm oil in March was 1.473 million tons, a decrease of 3% month on month and a year-on-year increase of 1.86%, lower than the previous estimates of 1.49-1.56 million tons by the three major institutions. Malaysian palm oil inventory decreased for the fifth consecutive month, The report data is beneficial to the oil price in the future.

2、 The policy side adjustment has a beneficial effect on the futures price of oil

The adjustment of the Indonesian government’s palm oil export policy is also the focus of recent market attention. On March 9, Indonesian Trade Minister Mohammed Luffy said that Indonesia would further restrict palm oil exports from March 10 to increase domestic supply and curb the rise of edible oil prices. From March 10, Indonesian exporters need to sell 30% of the crude palm oil and refined palm oil they plan to export at a fixed price in China, which is higher than the current proportion of 20%. However, on March 17, Indonesia’s palm oil export policy changed again. Indonesia cancelled palm oil DMO and increased CPO export tax. For every $50 / ton of CPO price increase, it will increase the export levy of $20 / ton until it reaches the maximum limit. When the reference price of CPO reaches more than US $1500 per ton, the maximum total amount of export tax and levy will reach US $675 / ton, a significant increase of US $300 / ton compared with the previous 200 + 175 = 375. Indonesia’s palm oil export tax continued to increase in April compared with March. The reference price of palm oil in Indonesia rose to US $1787.5/ton in April, compared with us $1432.24/ton in March. In April, levies on crude palm oil and crude palm kernel oil will be raised to USD 375, PFAD and pkfad will be USD 301, RBD palm olein will be USD 291, refined palm oil and refined palm kernel oil will be USD 294, RBD palm stearin and RBD palm kernel olein will be refined Refined stearic palm kernel oil (RBD palmkernstein) and firewood $281. Indonesia’s crude palm oil (US $200), crude palm kernel oil (US $245), refined palm oil (US $92), refined palm liquid oil (US $117), refined stearin palm oil (US $89), palm oil fatty acids (US $110) and palm oil to firewood (US $64) export duties remain unchanged. The strong quotation from Indonesia and the high tax have played a supporting role in the future price of palm oil.

In addition, the global consumption of biodiesel accounts for more than 20% of the total demand for vegetable oil every year. Under the background of high global vegetable oil prices and shortage of vegetable oil supply in some countries, the market is highly concerned about whether the biodiesel policies of the EU and the United States will be loosened. However, from the April 7 trend of the U.S. EPA, the U.S. support for biodiesel is still strong and is unlikely to loosen. The US EPA announced on April 7 that it had rejected 36 compliance applications for 2018 small refinery exemption (SRE) and did not need to purchase or redeem additional renewable identification number (RIN) to comply with the renewable fuel standard renewable amount obligation (RVO) in 2018. Instead, the agency allowed the 31 small refineries to use “alternative compliance methods”. Alternative approaches allow small refineries to resubmit 2018