Tight Supply To Push Stocks Down, Soybean Oil Will Rise Oil Plate
Replacement demand for soybean oil has picked up
According to the national grain and oil information center, the growth rate of domestic vegetable oil consumption has been declining since 2016 and is expected to drop to less than 1% in 2019. But demand from the vegetable oil industry has soared, including not only normal industrial consumption but also blended diesel consumption. According to preliminary statistics, lower pork production in 2018/2019 resulted in more than 400,000 tons of vegetable oil substitution consumption, which was mainly reflected in palm oil and soybean oil. However, as the weather turned colder and the price of palm oil rose sharply, the soy-brown spread fell from rmb1,273 / tonne in mid-november to rmb607 / tonne today. The cost-performance of palm oil fell sharply, with most of the replacement demand for vegetable oil shifting to soyoil. According to the calculation of apparent consumption, the consumption of soybean oil increased by more than 85% year on year in November, and the cumulative consumption of soybean oil increased by more than 11% year on year from January to November. Visible, substitute demand stimulates consumption of soybean oil greatly.
Tight supply is driving down inventories
Domestic soybean oil stocks continue to decline due to the impact of supply contraction and demand expansion. As of Dec. 3, soybean oil stocks at domestic ports had fallen to 915,000 tons, down 29.62% from 1.3 million tons in mid-july. At the later stage, domestic oil plants start up to press or further shrink. Even if the demand for soybean oil remains stable, the inventory will continue to decline. We expect that soybean oil port inventory is expected to fall below the historical low level of 500,000 tons in 2020. Lower inventory will continue to push up the price of soybean oil, is expected to future soybean oil up three major oils.
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