According to the Commodity Market Analysis System of SunSirs, in 2023, the external market was dominated by bearish sentiment, and terminal demand was sluggish. The domestic palm oil market continued to slide, with a weak overall oscillation throughout the year, with a decline of over 14%. At the beginning of the year, the average price of palm oil in the market was 8,356 RMB/ton. On December 31st, the average price of palm oil in the market was 7,120 RMB/ton, a decrease of 14.79%. The highest price for the whole year is only 8,406 RMB/ton, which is more than 7,800 RMB/ton lower than the historical high of 16,240 RMB/ton for palm oil in 2022.

In 2023, the overall domestic palm oil market can be divided into two stages. In the first half of the year, the domestic palm oil market experienced ups and downs, experiencing several rounds of ups and downs, with an overall oscillation and a decrease of 9.31%; In the second half of the year, domestic palm oil also experienced a volatile decline, with continuous fluctuations in the market, resulting in an overall decline of 6.04%.

According to the annual comparison of domestic palm oil from 2019 to 2023, it can be seen that palm oil is in a middle market in 2023, higher than 2019 and 2020, and there is a certain gap compared to 2021 and 2023. Especially in the first half of 2022, palm oil can be said to be at a historical high, with prices repeatedly reaching new highs. It began to decline in the second half of the year and has fallen to the same level as the same period in 2021 in the fourth quarter.

In 2024, can palm oil break free from the downward trend, hit bottom and rebound, and usher in a turning point? Let's analyze together?

Supply side: Domestic palm oil mainly relies on imports, and the quantity of palm oil imports has a significant impact on the market. Since 2018, the import volume of domestic palm oil has gradually increased. In 2019, the highest import volume of domestic palm oil was 5.61 million, and the import volume in 2020 and 2021 was similar, both reaching over 4.6 million tons. In 2022, the domestic palm oil import volume was the lowest, only 3.41 million tons. The estimated domestic palm oil in 2023 is 4.6 million tons, which is at a high level. In 2024, domestic palm oil will remain high.

Due to a significant decrease in the number of domestic palm oil imports in 2022, the market has also reached a historic high. In 2020 and 2023, the import volume of palm oil was high, and the market performance was poor, with weak performance. Although palm oil imports were relatively high in 2021, the market continued to rise due to power restrictions and shutdowns in soybean oil factories, which supported palm oil as a substitute for soybean oil. Since 2019, the domestic import volume has been continuously increasing, and the low level that occurred in 2022 is due to special events. In 2024, normally speaking, domestic palm oil imports will still be at a high level, which will have a suppressive effect on the palm oil market.

Futures: The trend of domestic palm oil futures and spot prices is relatively close, and due to dependence on imports, the fluctuation of spot prices is relatively stronger. Due to the main palm oil producing countries Malaysia and Indonesia, the palm oil production in Malaysia and Indonesia also affects the trend of futures markets. The production of palm oil is seasonal. March October is the production cycle for palm oil, while November February enters the production reduction cycle.

From the comparison of futures and spot prices from 2021 to 2023, it can be seen that in 2021, the palm oil futures and spot prices continued to rise, with the highest increase in the third quarter. This is a production increase cycle. Due to power restrictions that year, soybean oil plants shut down, palm oil supply shortages occurred, and the futures and spot prices continued to rise. Entering the first quarter of 2022, the Malaysian palm oil production reduction cycle, coupled with the continuous decline in palm oil imports, has led to a continuous rise in the futures and spot prices, reaching a record high of over 16,200 RMB/ton in the second quarter. In the third quarter, the palm oil production cycle entered, with bearish sentiment leading to a weak and downward trend in the current market, which has been falling until 2023. In 2023, palm oil supply will be loose, import volume will be high, and the current market will continue to be weak and hovering. In 2023, the domestic palm oil futures market has fallen to the bottom. In 2024, the overall palm oil market is better than in 2023. Malaysia's palm oil production still has cyclicality, with long and short factors intertwined, and the futures spot trend is relatively consistent, with overall oscillation and upward trend.

Demand side: The overall pressure on the catering industry in 2021 and 2022 has led to a decline in prosperity. The global consumption demand for the oil industry is poor, and the concentrated consumption of the domestic catering industry has significantly decreased, which is bearish for the palm oil market. The demand for palm oil in 2021 has a certain restrictive effect on the palm oil market, and the soybean oil market continues to rise in 2021 and 2022. In 2023, the tourism industry has improved, the prosperity of the catering industry has rebounded, and demand has shown a certain degree of recovery. However, the import quantity of palm oil remains high, and the palm oil market continues to be weak and consolidating in 2023. In 2024, with the continuous recovery of the tourism industry and an increase in concentrated consumption, the rigid demand in the terminal catering industry is supporting, and the demand side is favorable for palm oil.

SunSirs agricultural product analyst believes that the palm oil market has fallen to a low point in 2023 and continues to weaken. Supply pressure remains in 2024, with palm oil production in major producing countries showing positive trends and demand gradually recovering. Long short game, there is still a turning point in the palm oil market in 2024, and the overall market will be higher than in 2023. During the palm oil production reduction cycle, there will be a significant increase, and the first half of the year will be better than the second half.

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