The main palm oil contract FCPOc3 on the Bursa Malaysia Derivatives Exchange (BMD) closed at 4,435 ringgit/ton on Wednesday (August 13), up 0.75% on the day and achieving four consecutive days of gains. Technically, the price has broken through the middle track of the Bollinger Band (4,282 ringgit), with the MACD histogram narrowing to 9.39 and the RSI (14) rising to 66.26, indicating strong short-term momentum. The direct driving force behind this round of gains came from China's policy impact of imposing anti-dumping duties on Canadian rapeseed, which in turn pushed up the soybean oil (DBYcv1) and palm oil (DCPcv1) contracts on the Dalian Commodity Exchange by 1.49% and 1.4%, respectively.

Policy shocks reshape oil and fat trade landscape

On August 12th, Beijing time, China's Ministry of Commerce announced the preliminary ruling of its anti-dumping investigation into canola imports from Canada. The investigation uncovered extensive agricultural subsidy policies in Canada, deeming it a special market situation. A provisional anti-dumping duty of 75.8% was imposed on Canadian canola imports, effective August 14th. Anilkumar Bagani, Head of Research at Sunvin Group in Mumbai, noted: "Chinese rapeseed oil futures surged today, directly driving up palm oil and soybean oil. This policy may cause Chinese buyers to turn to Southeast Asian palm oil to fill the shortfall." Notably, Malaysia has raised its September crude palm oil reference price, raising its export tariff to 10%, further tightening supply expectations.

Cross-market linkage and substitution effects

Chicago Board of Trade (CBOT) soybean oil prices rose only slightly by 0.28%, contrasting with the strength in the Dalian market. This divergence reflects differing regional fundamentals: Chinese oil and fat inventories are at a seasonally low level, while North American new-crop soybean crushing has yet to be fully utilized. The Indian market presents a different picture: data from six traders indicate that the country's soybean oil imports in 2024/25 are expected to surge 60% year-on-year, reaching a record high; while palm oil imports are likely to decline 13.5% to 7.8 million tons, a five-year low. This confirms that, given the current price differential, the substitution effect of soybean oil for palm oil is deepening in the South Asian market.

Exchange rate and policy variable disturbances

The ringgit appreciated 0.54% against the US dollar today, somewhat weakening the export price competitiveness of Malaysian palm oil. However, industry insiders believe that the impact of unexpected Chinese policies will continue to dominate in the short term. A Singaporean multinational trader added, "If Canadian canola import costs remain high, China's palm oil purchases in the fourth quarter may increase by 8%-10% month-over-month, but caution should be exercised against the potential price pressure from increased Indonesian production."

Institutional Viewpoint Focus

Sunvin Group : Bagani emphasized that "the jump in China's rapeseed oil import costs will reshape the oil consumption structure, and the cost-effectiveness advantage of palm oil may be highlighted again in South China."

A research report from a well-known institution : Malaysia's export tax increase in September may curb short-term buying interest, but the increase in China's demand is expected to partially offset this impact.

Indian Solvent Extractors' Association : Preliminary data showed that India's palm oil imports fell 21% year-on-year in July, confirming the continuation of the soybean oil substitution trend.