multistrikevideopoker| US soybean oil: Shifts in policy expectations and UCO import restrictions trigger price rebound

Newsletter summary

The price of American soybean oil has rebounded by more than 4% recently, which is obviously affected by the demand for biodiesel. The market expects a change in the US biodiesel subsidy policy, which will stimulate domestic production and reduce import dependence. At the same time, the news of banning the import of China's UCO also brought good news to the market. Policy changes may boost demand for cottonseed oil, but the actual increase in consumption is still limited. Investors should pay close attention to the relevant policy trends.

Text of news flash

[the price of American soybean oil rebounded by more than 4%, and the market expects a change in policy may lead to demand growth] the price of American soybean oil rebounded strongly in the CBOT market overnight, rising more than 4%. The analysis shows that the biodiesel demand of cottonseed oil is the main factor affecting its price. Recently, the price of American soybean oil has dropped from 65 cents per pound to 42 cents per pound, mainly under pressure from two aspects: first, excessive biodiesel imports have caused mixers to generate excessive Rins codes, and D4 and D5 prices have significantly dragged down the profits of raw wood production and affected the overall biomass diesel production; second, the use of soybean oil in the United States has been squeezed out by UCO imports, vegetable oil imports and animal oil imports. The market expects that US subsidies for biodiesel will shift from mixers to producers, which could end the previous business model of importing biodiesel into the United States to obtain subsidies and increase domestic biodiesel production in the United States. In addition, the market has also begun to discuss NOPA's request for EPA to discuss banning imports of UCO,NOPA from China. Next week, the association's member crushers may also be banned from using UCO, mainly by raising tariffs on imports of Chinese UCO. According to the USDA, the United States imported 1.4 million tons of UCO in 2023, of which 71Multistrikevideopoker.80,000 tons are from China. From January to March 2024, the United States imported a total of 580000 tons of UCO, of which 344000 tons came from China. If the United States completely terminates the import of UCO from China, or brings about 700000 tons of feed to animal oil or vegetable oil, but the actual consumption increment of cowpea oil from the alternative reduction of UCO is bound to be squeezed out by corn oil and animal fat, which is of limited significance to alleviate the pressure on the inventory of cottonbean oil. The analysis shows that if the import tariff is increased, the performance-to-price ratio of UCO as a raw material may be reduced, but it will also increase the price center of American oil. The price of American soybean oil has previously been anchored with UCO, but in the later stage, the maximum probability of the bottom has already appeared, the expectation of supporting the bottom of demand may be tamped, and the upward elasticity depends on the changes on the supply side, while the clarity of the policy route of future subsidies from mixing to raw wood may once again bring the increase of demand. The transmission of overseas American soybean oil to China mainly depends on the linkage of global bullish sentiment spillover, and the increase in the price of American soybean oil stimulates the expected improvement of American bean squeezing profit, forms a good benefit to beautiful beans through the demand side, and transmits to domestic pricing with the help of beautiful beans. Based on the highly competitive nature of the current commodity market, the above statements of facts and expectations do not effectively define the future of cottonseed oil. The delicate process from fundamentals to price isMultistrikevideopokerWe pursue the direction of research, generally speaking, there are the following clues or guidelines: 1. Based on the configuration logic continues to dominate the commodity market, the overall valuation of CBOT agricultural products is undervalued than the commodity as a whole, but the leading non-ferrous phased bulls leave the market, which is expected to be more beneficial to undervalued agricultural products. 2. The MPOB report released in May showed that Malay palm oil stocks increased slightly month-on-month in April, but not enough to establish inventory lows in 2024. Positive signs are the negative impact of early rainfall on future production lag and still resilient palm oil export demand. 3. The expectation of production reduction in Europe has basically been formed, and the price and import volume of EU rapeseed oil and wheat are expected to consolidate the bullish trend in the later stage. 4. The key seasonal expected spread of the domestic protein meal market has been switched to the low spot basis of soybean meal in 2024. The general conclusion is that if the performance of Brazilian CNF in late May continues to be strong, it basically blocks the potential of seasonal decline in CNF in the future, and also implies that the domestic soybean meal basis has bottomed out, which can be expressed as a positive hedging position, and the drag on the futures market will disappear.