How does the change of supply and demand in palm oil market affect futures value？ What are the rules for these changes？

Palm oil, as one of the most important edible oils in the world, its market supply and demand changes have a far-reaching impact on the futures value. It is very important for investors and market analysts to understand these changes and their laws.

First of all, the supply of palm oil mainly depends on Southeast Asia, especially Malaysia and Indonesia. Palm oil production in these two countries accounts for more than 80% of the global total. Therefore, any factors that affect the production capacity of these two countries, such as climate change, policy adjustment or labor market fluctuation, will directly affect the supply of palm oil. For example, extreme weather conditions such as drought or flood may lead to a decline in production, thus pushing up palm oil futures prices.

Secondly, on the demand side, palm oil is widely used in food processing, biofuels and cosmetics. Global economic growth, population growth and changes in consumer preferences will all affect the demand for palm oil. For example, with the increasing global demand for renewable energy, the demand for palm oil in biodiesel production is also rising. This increase in demand usually pushes up the price of palm oil futures.

The impact of supply and demand changes on the futures value of palm oil can be displayed more intuitively in the following table:

In addition, the supply and demand changes of palm oil market still have certain seasonal laws. For example, November to February is the peak of palm oil production, because this period is the rainy season in Southeast Asia, which is conducive to the growth of palm fruit. On the contrary, June to August every year is the low yield period, because this period is the dry season, which is not conducive to the growth of palm fruit. This seasonal change will also lead to periodic fluctuations in palm oil futures prices.

Finally, global trade policies and geopolitical factors will also have a significant impact on the palm oil market. For example, the adjustment of tariffs, the change of trade agreements or the political instability of major producing countries may all lead to the imbalance between supply and demand in the market, thus affecting futures prices. Therefore, investors need to comprehensively consider these macroeconomic and political factors when analyzing the palm oil futures market.

In a word, the change of supply and demand in palm oil market is a complex and multi-factor driven process. Through in-depth analysis of these changes and their laws, investors can better grasp the market dynamics and make more wise investment decisions.

[Disclaimer] This article only represents the author’s own views and has nothing to do with Hexun. Hexun.com is neutral about the statements and opinions in this article, and does not provide any express or implied guarantee for the accuracy, reliability or completeness of the contents. Readers are requested for reference only, and please take full responsibility. Email: news_center@staff.hexun.com.