Athena Market Buzz
1530 06032023 Athena Market Buzz Monday
Greetings,
The POC event has begun and will continue until March 8th, 2023. However, India is currently experiencing extreme heat and the Holi holidays are causing the market to be less active. MDEX started off lower and at midday, May settled at RM 4264 -88, which is almost the day's low. At the time of writing this report, it is trading at the same level.
Malaysia's palm stocks are decreasing and exports are rising, resulting in Palm making gains for the fourth consecutive week. This week is expected to follow suit. As previously suggested, profit-taking is likely to continue if prices trade between RM 4350-4450. This range may also be used for shorting, which can be covered once prices touch RM 4000. Market participants should be ready to make longs once prices trade between RM 3550-3750. It is not expected that the market will collapse below these levels for the next 6 months, and a rally is unlikely to move beyond RM 5000.
Inflationary concerns, reduced economic activity, and higher temperatures decreasing overall consumption, along with India considering hiking duty, are the key reasons for limiting the rally. However, on the downside, factors such as rains and high temperatures damaging Indian, Argentina, and Ukraine crops could limit the correction. Palm is currently well-balanced, but other oils, especially sunflower oil and bean oil, may need to adjust slightly higher.
Bean oil is finding resistance to trade over 62.50, and May is currently trading at 60.81 -38. According to our analysis, bean oil is becoming increasingly bullish every passing day. Crop damage in Argentina is expected to push the flat price higher, but with economic tightness and inflationary measures, we do not anticipate a rally in CBOT. The rally is expected to come in flat price, and we expect the basis for MJJ to trade -500 eventually, which is currently trading at -1000 after reaching a low of -1200.
In CNF India, bean oil prices are quoted at USD 1210, but there is no significant buying activity. Sunflower oil for the same period is trading at a discount of USD 30, making soybean oil a less preferred oil. Indian markets are seeing a correction in domestic bean prices, and with the ongoing correction, we can expect prices to fall even further towards 5000 PMT. Ref soybean oil in the hinterland is trading at 1110, and degum is indicated at INR 1030-1040 with some buying interest. Our view is that if the price for MJJ falls between USD 1100-1150, one should not hesitate to make longs. On the other hand, prices between USD 1300-1350 will be worth making a short.
The ongoing conflict in Ukraine remains in a stalemate with Ukraine maintaining that they will emerge victorious, and continuing to seek financial support from the west. Meanwhile, rumors are circulating that Russia may have received aid from China, potentially prolonging the duration of the conflict. Around March 18-20, the grain corridor deal is expected to be called off, which could result in a slight tightening of the availability of sunflower oil to key destinations such as India, the Middle East, and China. Therefore, we advise our readers to explore alternative origins for forward months. Sunflower oil is currently the most affordable soft oil, and if the situation in the conflict changes, we may expect a strong rally in both local and international prices. The market is currently quiet, with best offers starting around USD 1190 for April/May shipments. Domestically, no trades have been reported yet, but demand exists at lower levels like INR 103 for Chennai/JNPT, while best sellers are asking for INR 105 for TRQ spot cargo.
The POC event has begun and will continue until March 8th, 2023. However, India is currently experiencing extreme heat and the Holi holidays are causing the market to be less active. MDEX started off lower and at midday, May settled at RM 4264 -88, which is almost the day's low. At the time of writing this report, it is trading at the same level.
Malaysia's palm stocks are decreasing and exports are rising, resulting in Palm making gains for the fourth consecutive week. This week is expected to follow suit. As previously suggested, profit-taking is likely to continue if prices trade between RM 4350-4450. This range may also be used for shorting, which can be covered once prices touch RM 4000. Market participants should be ready to make longs once prices trade between RM 3550-3750. It is not expected that the market will collapse below these levels for the next 6 months, and a rally is unlikely to move beyond RM 5000.
Inflationary concerns, reduced economic activity, and higher temperatures decreasing overall consumption, along with India considering hiking duty, are the key reasons for limiting the rally. However, on the downside, factors such as rains and high temperatures damaging Indian, Argentina, and Ukraine crops could limit the correction. Palm is currently well-balanced, but other oils, especially sunflower oil and bean oil, may need to adjust slightly higher.
Bean oil is finding resistance to trade over 62.50, and May is currently trading at 60.81 -38. According to our analysis, bean oil is becoming increasingly bullish every passing day. Crop damage in Argentina is expected to push the flat price higher, but with economic tightness and inflationary measures, we do not anticipate a rally in CBOT. The rally is expected to come in flat price, and we expect the basis for MJJ to trade -500 eventually, which is currently trading at -1000 after reaching a low of -1200.
In CNF India, bean oil prices are quoted at USD 1210, but there is no significant buying activity. Sunflower oil for the same period is trading at a discount of USD 30, making soybean oil a less preferred oil. Indian markets are seeing a correction in domestic bean prices, and with the ongoing correction, we can expect prices to fall even further towards 5000 PMT. Ref soybean oil in the hinterland is trading at 1110, and degum is indicated at INR 1030-1040 with some buying interest. Our view is that if the price for MJJ falls between USD 1100-1150, one should not hesitate to make longs. On the other hand, prices between USD 1300-1350 will be worth making a short.
The ongoing conflict in Ukraine remains in a stalemate with Ukraine maintaining that they will emerge victorious, and continuing to seek financial support from the west. Meanwhile, rumors are circulating that Russia may have received aid from China, potentially prolonging the duration of the conflict. Around March 18-20, the grain corridor deal is expected to be called off, which could result in a slight tightening of the availability of sunflower oil to key destinations such as India, the Middle East, and China. Therefore, we advise our readers to explore alternative origins for forward months. Sunflower oil is currently the most affordable soft oil, and if the situation in the conflict changes, we may expect a strong rally in both local and international prices. The market is currently quiet, with best offers starting around USD 1190 for April/May shipments. Domestically, no trades have been reported yet, but demand exists at lower levels like INR 103 for Chennai/JNPT, while best sellers are asking for INR 105 for TRQ spot cargo.
- ARG SBO
- Mch -920K vs -1000K
- Apr -920 vs -1000
- MJJ -960 vs -1050
- BR SBO
- Mch -900 vs -
- Apr -970 vs -1040
- May -1000 vs -1100
- JJ - vs -1090
- AS –vs -1050
- ASOND – vs -1050
- OND – vs -1050
- 6 ports Europe Spot 1140 v 1115
- AMJ 1145 v 1120
- JAS 1155 v 1130
- OND 1135 v 1120
- Palm oil Midday Market Close
- Bmd : May 4264 (-88)
- H 4317 / L 4253
- Vol : 17,979
- Oln:
- Mar 1015 vs
- Amj 1010 vs
- Jas 985 vs
- Ond 975 vs
- Rbdpo: -10
- Strn: Mar 980 (deld)
- Pfad: Mar 760 (deld)
- Local Cpo: Mar 4300
- Laurics:
- Cpko: Mar 252 (pk) / 252 (pg)
- Rbdpko: Mar 1080
- Rbdpkoln: Mar 1000
- Rbdpks: Mar 1430
- Sbo :
- Mar 6045 (-16)
- May 6085 (-34)
- Jul 6058 (-37)
- Black Sea sunflower oil April 1030 vs —
- Russian sunflower oil April 1030 vs. —
- Spain indicated for April at USD 1170 vs 1140
- Italy indicated for April at USD 1165 vs 1135
- CIF India indications for April at 1190 vs 1160
- Turkey not offered at the moment
- Currency INR 81.85, Rm 4.47, Rub 75.63 and Euro 1.0631
Vivek Pathak
Athena Tradewinds
(All views are personal and we do not claim to be 100 % correct. Trade very carefully and at your own risk)
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