CITIC Futures: Oils and fats continue to fluctuate

On the macro front, due to damage to crude oil-related infrastructure in the Middle East from a new round of war attacks, the Strait of Hormuz’s traffic volume remains at a low level, and crude oil prices have risen again.

In the soybean sector, U.S. soybean oil has pulled back from high levels as long positions take profit. With prices still relatively high, further upside movement will require fresh positive catalysts. Export sentiment for U.S. soybeans has weakened because Trump’s visit to China has been postponed. In the domestic market, Brazil’s soybean supply efficiency is still pending further consultations between the two sides, and there is also a risk of strikes by truck drivers in Brazil due to rising diesel prices and insufficient supply, which could disrupt soybean exports. If domestic subsequent plant start-ups decline, the soybean oil basis may receive support, but after oil prices rise, market purchase and sales willingness remains lackluster.

For palm oil, Malaysia’s production decreased in the first half of March, while export volume increased significantly on a month-on-month basis, boosting bullish sentiment in the market. At the same time, high prices suppress purchasing enthusiasm among importing countries. Middle Eastern turmoil has already nearly halted palm oil export volumes to Iran and the UAE. Palm oil export transportation and insurance have risen significantly, which may restrain demand.

For rapeseed oil, because crush margins on the board have improved, the market expects rapeseed supply to increase. From March to May, shipments will be concentrated for arrival at ports and then enter processing. Domestic rapeseed oil inventories have increased on a weekly basis, and attention should be paid to later-period rapeseed supply arrivals. Going forward, it is necessary to watch risks including potential crude oil pullbacks and risks arising from the divergence between expectations for biodiesel policy. (CITIC Futures)