Grey rhinoceros whose palm oil fundamentals may be ignored in 23 years.

Zhongtai Futures Shi Hengyu

In the past six months or so, the palm oil market has basically fluctuated sideways graphically, up and down, constantly consuming the enthusiasm and impulse of subjective traders. Pulled the fundamentals for a long time, and at last it was all macro. What kind of bagasse, such as DMO, B35, B40 and La Nina, was chewed and vomited on the ground, and then picked it up in a few days, chewed it in your mouth and vomited on the ground, which was not only tasteless, but even a little uncomfortable.

No, a friend told me two days ago that February 1 ST is coming soon, which is a big day in Indonesia. Why is this palm oil still so unhealthy?

I asked what the big day was.

He said: B35 is officially implemented!

I said, I didn’t even notice.

It is expected that it could not be fully traded in the market long ago, and if we look at the change rate, B30 will become B35. If there is no big fluctuation in refined oil consumption, that is, the base is basically unchanged, the increase of this consumption is 5/30=17%, while when B20 became B30, this consumption increased by 50%. This impact is completely different.

In terms of quantity, the raw material consumption of biodiesel in Indonesia in 22 years is equivalent to almost 9.5 million tons of crude oil (using the figures in the annual report of biodiesel of USDA, I’m too lazy to check Indonesia’s figures, which is not much different), and B35 can actually bring less than 2 million tons of consumption under the condition of unchanged base. A few days ago, GAPKI said that they thought it would bring 2.5-3 million tons of consumption, which was said to Dori.In fact, the average monthly consumption is more than 200,000 tons.Let’s remember this number first.

I think the fundamental reason why the oil has been sideways for more than half a year is that there has never been a particularly prominent fundamental contradiction in the market since Indonesia lifted the export ban, and there are more fundamental stories about the meal, which has taken away the low volatility share from the oil.

Observing the technical figure, the current price of oil is in the middle of a long period and a large interval, and the price is not high or low. It is no problem for the price to go up a big wave to keep up with the previous rhythm of similar industrial products and lean against the previous high point; If there is any macro problem, it seems that there is no particularly big problem.

Although we all know that the particularly long-term forecast may be useless, it seems that a lot of people who are bullish or bearish on oil have suddenly appeared recently. This situation is very interesting.

One thing I want to add to the market is that we need to pay attention to one thing that may have a great impact on the annual balance sheet, that is, the recovery of output in Southeast Asia.

The power of output recovery may come from two aspects: the recovery of Malay labor force and the natural growth of Indonesian Malay output.

At the beginning of the epidemic in 2020, in the first three quarters, it seems that none of us paid attention to the labor problem.

Then, after October of 2020, everyone suddenly found that the output at the peak of production could not come up.

Later, the market gradually found the answer is the lack of Malay labor force. This problem not only exists in oil palm planting, but also exists in all industries in Malaysia.

I’m a little regretful after the problem of labor shortage is realized in the output data of Malaysia, because the occurrence and action time of this matter can be expected completely-even if the labor shortage is not a big problem in the off-season, you can’t get more output in the peak season. At that time, the epidemic was already very serious, and the shortage of labor force was bound to occur in a country like Malaysia that relied heavily on foreign workers. The certainty of this incident is basically the same as the recovery of domestic optimism and consumer confidence during the Spring Festival after the epidemic control. It is a gray rhinoceros.

The problem of labor shortage has plagued Malaysia and continues to this day, far exceeding the market forecast. Earlier, people always thought that the problem would be solved soon, but it didn’t.

However, the Malay labor force will recover sooner or later, just like the previous labor shortage. If it returns to near normal level this year, the output forecast of Malay will have to be made again after entering the third quarter at the latest. Now that we have plenty of time, we should go to Malaysia to find out the specific situation. Leave this task to our friends who have money and leisure. Trust me when you get through the trouble.

Next, let’s talk about the second problem, that is, the output of Malaysia and Indonesia has naturally increased, especially Indonesia. Just look at the picture-

Source: GAPKI, China-Thailand Futures Research Institute.

Indonesia’s annual output has a relatively stable year-on-year growth, which can also be clearly seen from the above monthly output.

In 23 years, my total output was 56 million tons (according to GAPKI’s caliber).

You may think this number is scary.

But actually, if you look at the picture above, is this a ridiculous number?

The output in 2022 was originally abnormal-Indonesia’s export ban in May was directly abolished in the next four months, and it began to return to normal after September.

However, after the normal year-on-year growth rate was restored, the whole year of 23 years was more interesting.

This increase far exceeds the increase in consumption brought by B35-the average monthly increase in output can reach 400,000 tons!

Ok, be conservative, let’s give this increase a 50/50 discount! Then the function of B35 is basically completely hedged. Talk about He Liduo?

And now there is a deadly problem, that is, the inventory in the sales area is already full.

I dare not be too optimistic about the palm oil market in 23 years in the face of the Malay labor force that will be restored sooner or later and the amazing natural growth that Indonesia can achieve as long as it grows normally and naturally.

Write it here.

As the saying goes, every first month is a year.

I wish you a happy old age.