Why did the palm oil market suddenly fluctuate？ How will the Fed’s policies affect the future trend？
Huitong Finance APP News-Recently, the Malaysian palm oil futures market experienced a round of fluctuations. At the close of Friday (September 27th), the benchmark December palm oil delivery contract (FCPOc3) fell by 100 ringgit, or 2.41%, to 4,052 ringgit (about US$ 983.02) per ton. Despite this, the contract still achieved a weekly increase of 5.19%. This decline is mainly due to the strength of the ringgit, which makes palm oil more expensive for buyers holding foreign currency and inhibits short-term demand.
David Ng, a proprietary trader of Kuala Lumpur trading company Iceberg X Sdn Bhd, said that the recent price increase has attracted traders to take profits, further dragging down market performance. He pointed out, "However, the rebound of soybean prices in Chicago provided some support for the palm market and prevented it from falling further." This shows that although palm oil futures fell due to its own factors, it was still affected by the dynamics of soybean market, showing a certain resilience.
In the context of stable global oil prices, investors are weighing the impact of Libyan and OPEC+ organization’s production increase expectations and China’s new stimulus measures. The fluctuation of crude oil price directly affects the palm oil market, especially when palm oil’s position as a biodiesel raw material is gradually emerging.
Fundamental analysis: interdependence between crude oil and palm oil
The influence of crude oil market dynamics on palm oil prices can not be ignored. When the price of crude oil rises, the demand for palm oil as a substitute may rise, which will stimulate the price of palm oil to rise. However, when the price of crude oil falls, the price of palm oil may also be adjusted accordingly. The current fluctuation of oil price makes palm oil less attractive, especially when investors consider biodiesel raw materials.
According to the analysis of well-known institutions, the fluctuation of crude oil market will continue to affect the trend of palm oil in the short term. Investors should pay close attention to the relationship between supply and demand in the international market and the policy direction of the Federal Reserve Board. The Fed’s interest rate hike expectations and changes in monetary policy, especially the impact on the US dollar, will affect the commodity market, thus affecting the demand and price of palm oil.
Technical observation: short-term trend and support level
From a technical point of view, the decline in Malaysian palm oil futures contracts reflects the trend of alternating long and short positions in the short term. The current price is close to the short-term support level, and if it cannot rebound effectively, it may trigger a further callback. Analysts pointed out that the key support level is around 4,000 ringgit. If the price breaks through this support level, the market sentiment will probably turn pessimistic.
At the same time, traders should also pay attention to the price changes of other competitive edible oils. Recently, the soybean oil futures contract of Dalian Futures Exchange rose slightly, while the soybean oil futures contract of Chicago Futures Exchange fell slightly. These changes may suppress or support the price of palm oil.
News: global economic impact and observation of China market
With the increasing uncertainty of global economic environment, especially the new stimulus measures introduced by China, it will have a far-reaching impact on market demand. Although the palm oil market is currently facing double pressures from ringgit appreciation and crude oil price fluctuation, with the recovery of economic activities in China, it may support the demand for palm oil.
When considering palm oil futures investment, traders should pay close attention to the changes in China market, especially its demand for imported products. Investors need to understand the competition pattern between palm oil and other vegetable oils, especially how palm oil adjusts its market strategy to adapt to changes in the global market share competition.
To sum up, the palm oil market is facing many challenges and opportunities in the current economic and policy environment. Investors need to remain flexible and respond to changes in the market. Paying attention to the policy direction of the Federal Reserve and its potential impact on the gold and foreign exchange markets can help traders better understand the fluctuation of palm oil prices.