Athena Market Buzz

1210 06032024 Athena Market Buzz Wednesday 


ATHENA MARKET BUZZ


Good morning,

The Price Outlook Conference has potentially left traders somewhat perplexed, as the perspectives shared were broad and mostly aligned with our previous indications, albeit presented differently. The overall sentiment among speakers is bullish, particularly given the conference's primary audience, which consists mostly of originators, Chinese participants, and, to a lesser extent, Indian attendees.

Broadly interpreting the market, a consensus range of RM 3900 to RM 4500 is emerging, a view with which we have a slight disagreement. We anticipate that the production of other oils, especially bean oil and soybean oil, will rival the rally in palm. Although prices may climb towards RM 4250, we foresee a sell-off between RM 4250-4450. A correction back towards RM 3750 is expected to establish a new normal for the next 3-4 months. Subsequently, if prices trade lower due to the arrival of the Rapeseed crop in India or any duty revision by India, it could present a buying opportunity between RM 3550-3650.

While the consensus is that palm is in tight supply, with lower production and increased consumption in biofuel, food demand is anticipated to be mostly met by soft oils. Forecasts suggest a reduction in stocks towards 1.8 million MT in Malaysia, with this outlook already priced in. Any drastic changes, such as extreme weather events, war, or logistical issues, may further fuel a rally.

CPO prices offered to India stand at USD 965, with Refined, Bleached, and Deodorized (ROL) indicated at 930, the highest this month. Similar situations have historically occurred during conferences, where traders are enticed into buying, only to see corrections. Lower prices by the end of the week, driven by profit-taking, may provide traders with buying opportunities. In the local Indian market, ROL is trading between INR 890-895, and at some ports, sellers are requesting INR 900, significantly higher than sunflower oil or bean oil prices. Reduced disparities may tempt traders to make long positions; however, the recommendation is to wait and buy only during dips.

CBOT bean oil settled marginally lower last night, with March at 44.46-14 and May at 45.04 -13. Currently, it is up 27 points at 45.31. The situation in bean oil is straightforward - oversupply, sufficient crop, lack of Chinese demand, high stocks at origins and destinations, and no supply issues from Ukraine will keep the rally in check. The basis, currently trading between -500/-600, is expected to return to -1000 as CBOT increases from 45 to 50, with 52.50 being a resistance level. Funds remain short on bean oil, making it challenging for them to press the market further. With the FED looking to reduce interest rates around June, short bursts of rallies are expected, with funds gradually exiting their long positions. Cash market prices will likely remain between USD 950-940 CNF India. The suggestion remains to buy bean oil MJJ, especially if prices trade below USD 900, as summer months, when sun and soy pressures would ease, may take prices back to USD 1050 in India, where it will become a sell. Locally, Indian farmers express dissatisfaction with lower prices, while Poland and other European farmers are requesting lower imports from Ukraine. With a large Rapeseed crop, a bullish stance for nearby months is cautioned against. CNF India March indicates USD 950, April May at 948, and even June July is offered around the same levels. Traders in India continue to trade nearby premium and forward discount, providing an opportunity for stockholders to exit nearby longs and buy forward.

Black Sea sunflower oil has found new support, with CNF India prices mostly trading above the USD 920 mark. The pace of sunflower oil crushing has increased, and the likelihood of the market going towards USD 850 has diminished. This validates our previous suggestion for buyers to make longs between USD 900-850 and buy volumes on the dip. The recommendation is reiterated not to be overly bearish on sunflower oil and to secure requirements if prices correct below USD 900, even for forward months. For nearby prices, rivalling palm oil, it makes sense for Indians, especially in the southern part, to switch consumption from palm to sunflower oil. Black Sea FOB markets have sellers around USD 780, Turkey is now indicated at USD 860, six ports in Europe for AMJ already traded USD 940 yesterday, bringing CNF India prices indicatively at USD 940 for nearby months and USD 930 for April/May. Expectations are for sunflower oil prices to rally back to USD 1000 CNF India before summer, with further potential to trade at a premium to all other oils later in summer. As long as sunflower oil is cheaper than soya and palm, it presents an excellent buying opportunity, and one should not hesitate to own it.

  • ARG SBO
  • Mch -570/-670
  • Apr -600/-680
  • May -620/-740
  • MJJ -650/-750
  • BR SBO
  • Apr ?/-600
  • May ?/-700
  • JJ ?/-780
  • AS ?/-760
  • 6 ports Europe AMJ 925 vs 900
  • JAS 950 vs 930
  • OND 930 vs 900
  • Palm oil MIDDAY Market Close 
  • Bmd : May 4038 (+52)
  • H 4050 / L 3979
  • Vol : 25,923 
  •  
  • Oln 
  • Mar 905 vs 
  • Apr 905 vs
  • Amj 890 vs  
  • Jas 850 vs
  • Ond 840 vs 
  • Rbdpo: -5
  • Strn: Apr 905 (deld) 
  • Pfad: Mar 775 (deld)
  • Local Cpo: Mar 4120 
  • Laurics 
  • Cpko: Mar 273 (pk) / 273 (pg)
  • Rbdpko: Mar 1050
  • Rbdpkoln: Mar 985
  • Rbdpks : Mar 1155
  • Sbo : 
  • Mar 4451 (unch)
  • May 4518 (+14)
  • Jul 4558 (+11)
  • Dce :  
  • May 7534 (+16)
  • Sep 7068 (+26)
  • Black Sea sunflower oil FOB indications 780 vs 750
  • Russian sunflower oil FOB USD 770 vs —
  • Spain indicated for April at USD 930 vs 910
  • Italy indicates for April at USD 925 vs 890
  • CIF India lw Ukraine  March 940 vs — April/ May 930 vs 900 and June 925 vs
  • Turkey Mersin indicated USD 860 vs 825
  • Currency INR 82.89, RM 4.73, Rub 90.70and Euro 1.0863
  • Thanks and regards


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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