SunSirs: China Palm Oil Market is Expected to Soar by Over 40% in 2024

According to the Commodity Market Analysis System of SunSirs, in 2024, the palm oil market will be in a red trend, with the highest price reaching 10,100 RMB/ton and fluctuating upward by more than 41%. At the beginning of the year, the average price of domestic palm oil market was 7,120 RMB/ton, and at the end of the year, the average price of domestic palm oil market was 10,102 RMB/ton, an increase of 41.88%.

In 2024, the palm oil market rose more and fell less throughout the year, with an increase of 8 months and a decrease of only 4 months. It rose in the first quarter, fell more and rose less in the second quarter, and rose overall in the third quarter, with the largest increase in the fourth quarter. Among them, the highest monthly increase occurred in October, with an increase of 8.97%, and the largest monthly decline occurred in April, with a decrease of 6.13%.

The palm oil market trend in 2024 can be divided into three stages: the first upward period, the weak oscillation period, and the second upward period.

The first period of increase: the first quarter. After New Year's Day, Malaysia's palm oil production decreased, inventory was low, exports were strong, and the external palm oil market continued to rise. Domestic palm oil futures followed suit, and spot prices were supported. In the first quarter, the palm oil market saw an increase, with an overall increase of over 15%.

Weak oscillation period: April to July. After the Qingming Festival, palm oil production in Malaysia is expected to increase, leading to a decline in palm oil futures prices overseas and weak gains in domestic futures prices. Palm oil spot prices have entered a downward trend, with a drop of over 6% throughout April. After the May Day holiday, the demand for terminal oils and fats increased, and negative factors gradually realized. The palm oil market entered a weak consolidation period, which lasted until July, with an overall decline of around 1%.

Second uptrend period: August to December. Starting from August, the growth rate of palm oil production in Malaysia has declined, gradually entering a period of production reduction. The external market is dominated by bullish trends, while the domestic palm oil futures market has rebounded. The spot market continues to rise, rising until the end of December, with prices increasing from 7,800 RMB/ton to 10,100 RMB/ton, an increase of over 28%.

The supply is gradually tightening, and the palm oil market will soar in 2024, with prices breaking through the 10,000 RMB mark and an annual increase of over 40%. How will the palm oil market perform in 2025?

International Palm Oil Supply Situation: In the past six years, Malaysia had the highest palm oil production in 2020, reaching 19.68 million tons. In 2021, Malaysia's palm oil production significantly decreased, dropping to 18.1 million tons. Starting from 2022, palm oil production has gradually rebounded, and from 2023 to 2024, palm oil production will remain at a high level, at around 19 million tons. Malaysia's palm oil production will remain loose in 2025.

Domestic palm oil supply and demand: According to the balance sheet of edible vegetable oil supply and demand in China, the import volume of palm oil in China will decrease by about 3.8 million tons in 2025, a decrease of 15.5% compared to the previous period; The estimated increase in domestic exports is 260,000 tons, with a month on month increase of 52.9%; The domestic consumption of palm oil has decreased by approximately 36.65 million tons, a decrease of 1.9% compared to the previous period.

SunSirs's agricultural product analyst believes that by 2025, Malaysia's palm oil production will have become mainly loose in terms of supply, while domestic supply will become tight and consumption will also decline. It is expected that the palm oil market in 2025 will be difficult to replicate the sharp rise in 2024. During Malaysia's production reduction cycle and peak demand season, the market will remain high, and the rest of the time will continue to operate weakly.

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