Analysis: Palm Oil

Malaysian Palm Oil Update

Oct 13, 3:45 pm | Biofuels, Palm Oil, Soybeans

Malaysian palm oil production in September was slightly below August, the 2nd consecutive monthly decline, and also slightly under expectations at 1.8 MMTs. However, monthly production figures have recovered from the previous year’s drought and largely been above a year ago since December. Total production for the 2016/17 crop marketing year totals 18.9 MMTs, a 7% recovery from a last year but still less than the 5 year average and the 2nd lowest annual total since 2012/13. The latest estimates from the USDA project annual production in 2017/18 will increase by 2.1 MMTs (11%) to a record large 21 MMTs as palm plantations expand by 6%, while palm oil yields are expected to average 5% better through the year. The…

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Malaysian Palm Oil Update

Apr 10, 2:58 pm | Palm Oil

The monthly Malaysian palm oil report was viewed as bearish, with monthly production, exports, and stocks figures all coming in above expectations. Palm oil futures fell sharply after the report release, which in turn kept US soyoil futures underwater at the start of this week. The Malaysian Palm Oil Board reported March output at 1.46 MMTs, up from 1.2 MMTs last year, and also above expectations for 1.39 MMTs. March was the 4th consecutive month that production was above last year, and the 2nd month above the 5 year average. Seasonally, monthly production figures will increase into October, while a recovery in yields also looks to keep production totals well over a year ago. A similar recovery in yields can…

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Monthly Malaysian Palm Oil Update

Sep 14, 3:56 pm | Palm Oil

Malaysian palm oil prices marked a summer low in mid-July and then rallied sharply into late August, as monthly production totals continue to disappoint. There has been a normal seasonal recovery in output this year, however monthly output continues to under perform both last year and the 5 year average on reduced early season rains and crop stress. Production in August was reported near expectations at 1.7 MMTs, a 17% decline from last year and the lowest August production total since 2011. Cumulative production for the year now stands at 16 MMTs versus 18 MMTs last year, and is also the lowest Oct-August production figure since 2008. Fortunately soil moisture has been recharged through the summer, and better yields/production are expected to develop in the…

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US Soyoil Exports and Price Outlook

Aug 17, 12:53 pm | Palm Oil, Soybeans

US soyoil futures have caught fire in recent weeks, largely driven by a strong rally in Malaysian palm oil futures and narrowing spreads. Since the start of the month, palm oil futures have rallied nearly 7 cents/Lb, while spot soyoil is up just over 4 cents. The spot spread between the 2 vegoil futures markets fell to a multi year low this week of just 1.5 cents/Lb. The move in palm oil prices has been driven low production figures and tight stocks. Typically production rates bottom in February, and then quickly bounce higher through the spring/summer months. The seasonal bounce this year has been quite muted, and year to date production is off 10% from last year. Exports on the…

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Monthly Malaysian Palm Oil Update

Apr 11, 4:44 pm | Palm Oil

Malaysian palm oil futures reached a 7 year low late last summer, and have since moved higher as low prices enticed demand amidst seasonally declining production. The seasonality within the Malaysian palm oil balance sheet is one of the strongest in the commodity sector and the market is following the pattern.   Malaysian palm oil production for the month of March was reported at 1.2 MMTs, a 17% increase over February, and slightly better than the average trade estimate. Cumulative Oct-Mar production totals 8.5 MMTs versus 8.8 MMTs a year ago – the slowest production rate since 2010. Seasonally production tends to increase (even in poor yielding years) for the remainder of the year, which should confirm a market top in…

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China Spot, Forward and Import Margins

Sep 28, 11:13 am | Palm Oil, Soybeans

The red line in the first chart represents the estimated margin for soybeans “spot” delivery and was -22 Yuan/MT, down 20 Yuan/MT from a week ago.

The blue line is for beans in the “forward” market.  Today’s “forward” margin is +107 Yuan/MT, up 1 Yuan from a week ago and -177 Yuan/MT below what they were on this date a year ago.

The second chart shows the soymeal price used to calculate the crush margin. Soymeal’s price is up 1.5% from a week ago.

The third chart shows the soyoil price used to calculate the crush margin. Soyoil’s price is up 1.7% from a week ago.

The fourth chart explores palm oil and soy oil import margins. Palm oil was down 268 Yuan/MT, down 22 from one week ago. Soyoil import margins are down 263 Yuan/MT, down 141 from one week ago. Rarely have import margins been positive.