since the beginning of this year, with the increase of global agricultural products prices, the price of food oil in the international market has also shown an upward trend. Futures prices such as soybean oil and rapeseed have been hitting new highs, and wholesale and retail prices have followed suit. Many food and oil exporting countries share the dividends brought by the rise, but at the same time, there are also hidden concerns about inflation caused by high prices in their own markets.
1. The price of the international futures market remains high, hitting record highs, and the price is at a historical high recently.
Since the beginning of this year, the internationally influential food oil futures price indexes such as beans futures of Chicago Board of Trade (CBOT), rapeseed futures of Winnipeg Commodity Futures Exchange (WCE) and crude palm oil futures of Malaysian Derivatives Exchange (BMD) have shown a sharp upward trend.
Soybean is the basic product of food oil and the most important futures variety. Rapeseed oil and palm oil are regarded as substitutes in the international market. Therefore, the CBOT soybean market is taken as an example to illustrate the price trend. From the opening of the market on January 3rd to July 13th, it opened at 7.7, with the highest 948.3 and the lowest 671.3, and closed at 948.1, up 257.6 (all in cents per bushel), with an increase of 36.7%. Its trend has gone through three stages. In the first stage, from the lowest point of CBOT soybean index on January 1th, 671.3 cents/bushel (1 bushel of soybean = 27.1 kg) to the highest point on February 22nd, 813.5 cents/bushel, with the maximum range of 142.2 cents/bushel. The main hype factor is a survey report thrown by Pro Farmer in the United States, which shows that the planting area of soybeans in the new season in the United States may be drastically reduced by 8.6 to 9.4 million acres. The second stage: from the lowest point of 732.2 cents/bushel on April 24 to the highest point of 882.4 cents/bushel on June 18, with the highest range of 15.2 cents/bushel, and the main influencing factor at this stage is the weather. The weather has soared by more than 1 cents per bushel. The third stage: from the lowest point of 817.4 cents/bushel on June 22 to the highest point of 948.3 cents/bushel on July 13, its maximum fluctuation is 13.9 cents/bushel. Futures prices hit a three-year high. This is mainly because the US Department of Agriculture released a report that surprised all market participants on June 29th, that is, the soybean planting area in the United States in 27 is expected to be 64.81 million acres, which is 3.59 million acres lower than the data in March, far below the average of 67.838 million acres generally predicted by the market (the forecast range is 66-69 million acres). On the same day, CBOT soybean contracts once opened at a daily limit.
After three stages of market speculation-sowing area-weather conditions-sowing area, CBOT soybeans increased by nearly 26 cents/bushel. It is worth noting that in the past, CBOT soybeans were in a cycle mode of rising-planting area increasing-falling-planting area decreasing-rising again, but now there is a vicious cycle mode of rising-planting area decreasing-rising again-reducing planting area.
In July, the monthly supply and demand report released by the US Department of Agriculture predicted that the global soybean output in 27-28 would reach 222.1 million tons, which was lower than the 225.3 million tons predicted in June and 236.1 million tons in 26. In fact, except Brazil, the soybean production of several other major soybean producing countries in the world has decreased to varying degrees, among which the soybean production of the United States has been lowered to 71.4 million tons (74.7 million tons in June and 86.8 million tons in 26). The soybean production in Argentina is predicted to be 47 million tons (47.2 million tons in 26-27). The soybean production in China is estimated to be 15.6 million tons, which is also lower than the 16.2 million tons in 26-27. However, Brazil's soybean production is expected to reach 61 million tons, which is the same as the estimated value in June and higher than the 59 million tons in 26-27.
from the demand side, the global soybean consumption has been slightly reduced to 234.2 million tons (it was predicted to be 234.3 million tons in June and 225.2 million tons in 26). The global soybean export is estimated to be 75.5 million tons, which is the same as that predicted in June, and 7.5 million tons in 26, of which Argentina's soybean export is expected to increase to 1.2 million tons (8.6 million tons predicted in June and 8 million tons in 26) and Brazil's soybean export is expected to be 29.7 million tons (29.7 million tons predicted in June and 24.6 million tons predicted in 26). The United States expects 27.8 million tons (29.4 million tons in June and 29.7 million tons in 26). This will also reduce the global soybean ending inventory to 51.87 million tons at the end of September 28 (it was predicted to be 54 million tons in June and 64.17 million tons in 26).
generally speaking, the report confirms the market's recent concern about the tight global soybean supply in the next year, which also makes the market extremely sensitive to any factors that may lead to the decrease of soybean yield in the United States or the decrease of soybean planting area in South America. According to the latest weather forecast, there may be hot and dry weather in the corn planting belt in the western United States, and the end of July and August are the key pod setting and filling stages of soybeans in the United States. The hot and dry weather will lead to the loss of soybean yield potential. In addition to the weather, the increase in soybean prices in the United States is also to encourage Brazilian farmers to increase the planting area. It is generally expected that the planting area of new soybeans in Brazil will increase by more than 5 percentage points compared with that in 26. However, from the perspective of the continuous strengthening of the real exchange rate, this is obviously not conducive to the increase of soybean planting income in Brazil, because Brazilian soybeans are mainly used for export, so the weaker the US dollar is relative to the real, the less income farmers will get back. At present, the exchange rate of the real is at a high point in the past seven years, and 1 real can be exchanged for .53 US dollars, which may reach 1.8 real before the end of the year. Therefore, before the start of the soybean planting season in South America (that is, in the next three to four months), it is very likely that Chicago soybean futures prices will remain high, especially if there is hot and dry weather in the midwest of the United States, so as to encourage South American farmers to increase soybean planting area as much as possible and make up for the global supply gap caused by the decline in soybean production in the United States.
Canadian WCE rapeseed futures and Malaysian BMD crude palm oil futures are basically in the same trend as CBOT. Since 26, the futures price of Malaysian crude palm oil has soared by nearly 8%, and the spot price has reached an eight-year high.
2. Three factors support the rise of international palm oil price
Since July, the international palm oil market has risen sharply, and the FOB price of 24-degree palm oil in recent months is $797.5 per ton (the same below), up $22.5 from the previous week; The FOB price of 33-degree palm oil was $792.5, up $22.5; Palm oil at 44 degrees was 77 dollars, up 1 dollars.
the main supporting factors for the rise of the international palm oil market are as follows: first, driven by the sharp rise of CBOT soybean market. The U.S. Department of Agriculture sharply lowered the data of soybean planting area in the United States in 27, which led to a sharp rise in CBOT soybean market and played a supporting role in BMD palm oil. Second, the recent sharp rise in crude oil on the New York Mercantile Exchange (NYMEX) has improved the demand prospect of palm oil in the biofuel industry and attracted more speculative funds. The Malaysian government plans to require the blending of biodiesel into traditional fuels by 28, and intends to provide subsidies to ensure the success of biofuel projects, which also supports the BMD palm oil market. Third, Indonesia raised the export base price of palm oil, which increased the export competitiveness of Malaysian palm oil. The Indonesian government raised the benchmark export price of crude palm oil from $622 per ton to $676. The benchmark export price of 24-degree palm oil was raised from $676 to $746; The benchmark export price of 33-degree palm oil was raised from 652 dollars to 737 dollars. Indonesia's upward adjustment of palm oil export price is beneficial to Malaysia's palm oil export and to BMD palm oil market.
3. The global rapeseed supply tends to be tight, and the overall price trend keeps upward.
According to German Oil World, the consumption of 1 major oil crops in the world is expected to reach 396 million tons in 26/7, which is higher than the output of 392 million tons in the same period. The global rapeseed output in 27 is estimated to be 51.6 million tons, higher than 47.2 million tons in the previous year. Among them, the EU rapeseed production is expected to reach 17.8 million tons, compared with 16.1 million tons in the previous year; China's output is expected to be 11 million tons, down from 12.7 million tons last year. Canada's output is expected to increase to 9.8 million tons, compared with 8.5 million tons in the previous year; Australia's output is expected to increase to 1.4 million tons, compared with 51, tons last year. However, it still can't meet the growth of demand. The global consumption of rapeseed has increased significantly, which is estimated to be 52.2 million tons, compared with 49.1 million tons last year. The processing capacity of rapeseed is estimated to be 49 million tons, compared with 46.1 million tons last year. Judging from the ending inventory, it is estimated to be 4.7 million tons this year and 5.3 million tons last year, and the ratio of inventory to consumption is expected to be 9.% and 1.9% last year. It can be seen that the global rapeseed supply tends to be tight this year, and the overall price trend continues to rise.
there are many reasons for the shortage of supply and demand, one of which is the speculation of biodiesel in the market, so it is expected that the demand for vegetable oil, soybean oil and palm oil will increase greatly, and the fundamentals of supply and demand will be tight. This is obvious in the market reaction at the end of last year. In Germany, with the drop in energy prices, the relatively firm price of vegetable oil and the drop in profit from biodiesel production caused by the energy tax of 9 cents per liter implemented in August 26, the consumption of biodiesel decreased, and the prices of rapeseed oil and rapeseed fell briefly. Since the beginning of this year, due to the sharp increase in the prices of soybean oil, vegetable oil and palm oil, such a high cost has lost its significance as a raw material for biodiesel. However, there are constantly new forecasts to increase the production capacity of biodiesel, which will undoubtedly bring a oppressive atmosphere to the supply of rapeseed and provide a basis for its high price.
4. The rising price of food oil in neighboring countries has brought about tight supply and intensified inflationary pressure.
Palm oil is the main edible oil for Indonesians. However, due to the soaring price of palm oil as cooking oil and biofuel, many Indonesians can only cook without oil because they can't afford it. Many poor Indonesians have been forced to eat boiled food instead of fried food in oil.
As one of the largest palm oil producers in the world, Indonesia will benefit from the rising oil price. However, the domestic edible oil price has also risen by a third, which makes it unaffordable for tens of millions of ordinary Indonesians in Qian Qian. In addition, the rising price of edible oil has also made economic policy planners worry about the impact on inflation. The price of unprocessed food, including edible oil, rose by more than 1% in June this year compared with the same period of last year, which is the largest increase in the basket of goods and services that constitute the consumer price index.
India is a major importer of vegetable oil, and half of the annual demand for edible oil is met by imports. India's dependence on imported vegetable oil has also increased due to the expected reduction of oil seed production this year. The increase in the price of edible oil in India is due to the decrease in local oilseed production, and the international palm oil price has hit a new high for several years, which also brings obvious support.
The recent strong vegetable oil price in India has brought about a continuous high domestic inflation rate. By the end of March, India's wholesale price index had increased by 6.39% compared with that of a year ago. In order to control the inflationary pressure, the Indian government has lowered the import tariff of crude palm oil from 7% to 6% and refined palm oil from 8% to 67.5%. In contrast, the import tariff on soybean oil remains at 45%. Since the basic price used to calculate the tariff is still maintained at the level of July 26, this will help to reduce the import cost of these edible oils and also contribute to the import growth.
Generally speaking, the price of food oil abroad is still on the rise. Apart from the reduction of planting area and weather factors, the continued depreciation of the US dollar, the global threat of inflation and the investment funds making waves in the futures market are also important factors. It is estimated that CBOT soybean market is likely to reach 165 cents/bushel or 1116 cents/bushel.