In 2024, the focus of the oil market is expected to be higher than that in 2023. Before the recovery cycle of palm oil production came, Indonesian and Malay stocks remained at a low level, and the demand in China market was strong, making palm oil the strongest part of the oil varieties.

In recent years, the pattern of oil market has changed significantly. Palm oil has been the leading variety in the past ten years, but in the next five to ten years, the price of palm oil will be higher than that of soybean oil. This change is mainly due to the sharp slowdown of new palm planting area in Malaysia and Indonesia since 2016.

The growth of palm oil production is closely related to the age structure of trees. The newly planted palm trees began to produce output in the second year and reached a rapid growth in about eight years. However, after 10 years, the yield will tend to be stable, and after 20 years, the increase of tree age will lead to the decline of yield per unit area.

Before 2012, the global monetary environment was relaxed, the land price was low, and palm oil development was concentrated. Since then, Indonesia’s exchange rate advantage has weakened, land prices have risen, and due to the policy restrictions of Indonesia’s Ministry of Agriculture, palm tree development has weakened and output growth has slowed down.

At the same time, Brazil’s soybean production continued to grow, while palm oil production did not increase significantly. In the next 5 to 10 years, the spread between beans and brown will be negative or normal.

According to the estimated data of oilseeds, the loose situation of global oil supply in 2023/24 is expected to improve. Although the expectation of oilseed accumulation still exists, the high consumption expectation (7.2 million tons) may bring about the expectation of about 1 million tons going to the warehouse.

The influence of El Nino phenomenon on palm oil production can not be ignored. The fob basis of Indonesia and Malaysia shows that the short-term oil and fat market will remain strong.

The demand for vegetable oil in the global firewood market continues to grow. In 2024, the global demand for vegetable oil and firewood is expected to increase by 3.9 million tons. Policy adjustments in the United States and Brazil will have a significant impact on global oil demand.

Generally speaking, the oil and fat market will take on a new pattern in 2024. Before palm oil production resumes, Indonesian and Malay stocks are low, and China has strong demand, which has become the focus of the market.