Palm oil will gradually bottom out and rebound

　　　After the downturn of palm oil in 2018, with the peak of production, biodiesel will gradually rebound after the rapid development of economic and policy boost.
　 　Palm oil production in 2018 is generally a state of recovery growth. However, due to the shortage of manpower caused by weather and holidays, the monthly yield recovery of palm oil in Malaysia in the first half of the year was less than expected, while the yield recovery in the second half of the year gradually improved, and the peak output was later than the previous year. At present, it is predicted that the probability of the formation of El Ni? o phenomenon will be 70% in the winter of 2018/2019, and the possibility will increase. According to past experience, if El Nino is formed, it will usually start to affect palm oil production after half a year, but it will usually have little impact at the initial stage, and even support growth, so palm oil production growth may slow down and adjust year-on-year in 2019. At present, the industry expects further palm oil production, and the supply situation of different vegetable oils in the world in 2018/2019 is very different. Among them, the growth rate of palm oil production may slow down, and soybean oil production may be restricted in the early 2018/2019. However, the supply of sunflower oil and rapeseed oil is expected to be relatively sufficient. Due to the sharp increase in global palm oil inventory and other vegetable oil inventory in 2017/2018, the initial inventory in 2018/2019 is very large. In 2018/2019 (October to September of the following year), the growth rate of global palm oil production may slow down, because more oil palm trees are replayed, and the yield growth rate will decline. In 2019, the growth of supply side may slow down, and the pressure brought by supply will be weakened, but because the absolute quantity of palm oil in the world is still high,Inventory consumption ratio still shows the most abundant state of vegetable oil market. Therefore, palm oil will remain the stabilizer of global vegetable oil prices.
　 　In addition to the pressure from the supply side, demand changes also need attention. Among the traditional palm oil importing countries or regions, China and the United States have improved their import growth potential, while South Asian countries have relatively large demand growth potential, the EU is relatively stable, and Africa may grow further. However, among the countries with the largest palm oil imports, the Indian government has raised the import tariff on palm oil five times since August 2017, raising the import tariff on crude palm oil to 44%, higher than the previous 30%, and raising the import tariff on refined palm oil from 40% to 54%, which has correspondingly curbed the import of palm oil. Due to the asymmetric increase of import tariff threshold, other vegetable oil imports once benefited and competed for the market of about 1 million tons. However, as the total amount of vegetable oil imported from India is nearly 10 million tons, domestic production is not enough to make up the gap, and the import will continue, but the scale will be affected to some extent.
　 　The problem of palm oil on the trade side exists in both short and long term. In the recovery period of production in 2018, the unfavorable factors on the trade side were amplified by the market, which led domestic palm oil to fall to the low point since the end of 2015 and became a short board. However, in the long run, this influence will have a far-reaching impact on the demand for raw wood of palm oil. The import of EU will probably stop rising and fall, and the potential growth of palm oil import in the later period may still be in India, Pakistan, Bangladesh and China, and there may also be improved import demand.
　 　Palm oil is the most abundant vegetable oil supply in the world. In 2018, the overall market supply was sufficient, and the recovery of palm oil production played an important role. In the past two years, palm oil production has been reduced, and the price difference between soybean and palm oil has been reduced to a level close to water. Of course, this time is relatively short. In 2018, Argentina’s production reduction and the anti-dumping measures of biodiesel adopted by the United States, the strong demand for soybean oil in the United States is expected to continue. Under the expectation of a significant increase in palm oil production, it was originally thought that the oil price difference between soybean and palm oil might exceed $100/ton. This trend did not appear in the first half of the year when palm oil production decreased and palm oil production increased less than expected, but it gradually appeared in the second half of the year when palm oil production increased faster. The oil price difference between soybean and palm oil returned to above $150/ton, with obvious difference, and the relative advantage of palm oil in the international market has been very obvious.
　 　Conclusion:
　 　1. In 2019, palm oil may be gradually affected by the slowdown of output growth due to the formation of El Ni? o climate, which will greatly reduce the further incremental pressure on global vegetable oil supply.
　 　2. In 2018, the relative shortcomings of palm oil in oil and fat have been more obvious in the price difference. The spread of international trade has begun to turn in favor of palm oil demand.
　 　3. The crude oil is not expected to be bad, and the production of biodiesel from palm oil is profitable. Major palm oil producing countries are increasing the use of biodiesel, and the marginal demand growth is guaranteed.
　 　4. The whole domestic vegetable oil has gone through the process of destocking. Marginally, there is a shortage of vegetable oil supply and demand, and domestic crushing may be affected by changes in feed demand. The ratio of oil to meal is expected to rebound obviously, and the overall pressure of oil is lower than that in 2018.
　 　5. Palm oil may show a significant recovery trend under the condition of marginal improvement of supply and demand. At present, the bottom area is mainly bargain hunting.