1. Report Industry Investment Rating There is no information provided in the content about the report industry investment rating. 2. Core Viewpoints of the Report - The current situation of the oil and fat market is characterized by weak reality and strong expectations, with potential bullish drivers in both production and demand in the second half of the year. The US biodiesel policy injects upward momentum into the entire oil and fat sector [2]. - Before the fourth quarter, it is advisable to go long on palm oil and rapeseed oil at low levels, and consider going long on soybean oil as appropriate. For US soybean oil, it is recommended to configure it by going long on the US oil - meal ratio, while closely monitoring any policy changes in the US biodiesel sector and the resumption rhythm of oilseeds and oils production [2]. - When the US biodiesel policy impacts the global oil and fat demand pattern again, the results of the RVO final case announcement and subsequent subsidy plans have become the most important leading factors for the oil and fat market. Wait for the rulings of the 45Z and RFS models on imported raw materials to guide the price differences between different oils and the opening of the upward space for US soybean oil [3]. 3. Summary According to the Table of Contents 3.1 2025 H1 Oil and Fat Market Review - **Phase 1 (Dec 2024 - Mid - late Jan 2025)**: The supply pressure of new Brazilian crops and the depreciation of the real led to a continuous decline in Brazilian soybean discounts. The US soybean oil futures were affected by the pessimistic expectations of the biodiesel policy, and the marginal bullish factors for palm oil were scarce. As a result, the entire oil and fat sector was under pressure [6]. - **Phase 2 (Early Feb - End of Mar 2025)**: The unexpected bullish USDA report at the beginning of the year, the full - fledged trading of the pessimistic expectations of the US soybean oil biodiesel policy, and the short - term strength of US soybean oil due to the cold wave in US fuel laid the foundation for the rise in February. After the Spring Festival, soybean oil was strong due to import cost support, and palm oil was strong due to low production and supply concerns [7]. - **Phase 3 (Apr - End of May 2025)**: Palm oil fluctuated between strong reality and weak expectations. The market was divided on the inflection point, and the multi - short game was intense. After the Qingming Festival, the three major oils followed the decline of international oil prices, and then entered a period of bottom - building and waiting for new contradictions [8]. - **Phase 4 (Jun 2025 - Present)**: Geopolitical risks in the Middle East boosted oil prices, and the positive news of the US RVO policy injected upward momentum into the oil and fat sector. US soybean oil regained independent upward pricing power on the demand side and drove up international oils, waiting for more resonance factors in the third quarter to determine the direction [8]. 3.2 2025 Oil and Fat Supply Outlook - **Overall Supply and Demand**: In the 24/25 period, the global supply of the four major oils is estimated to increase by about 2.53 million tons to 206 million tons, with a significant slowdown in growth compared to the previous two years. Consumption is expected to decrease by 1.9 million tons to 203 million tons. The ending inventory is expected to increase by 3 million tons to 27.71 million tons, and the stock - to - use ratio will rise from 12.06% to 13.64%. In the 25/26 period, the total production of the four major oils is expected to increase by 6.5 million tons, demand will increase by 4.8 million tons, and the ending inventory will continue to be rebuilt [17][18]. - **Palm Oil**: In 2025, the cumulative production of Malaysian palm oil from January to May increased by 0.17% year - on - year. The production in April and May exceeded expectations, challenging the view of yield decline due to aging trees. In June, production is expected to remain flat or slightly decrease. For the whole year, it is estimated that the production of Malaysian palm oil will be around 19.2 million tons, with a risk of lower production in July - August compared to last year. In Indonesia, production is expected to recover to 55.2 million tons in 2025, but there may be a risk of lower - than - expected production from June to July next year [23][24][27]. - **Soybean Oil**: In the 24/25 period, global soybean oil production will reach 68.38 million tons, an increase of 3.51 million tons year - on - year. Consumption is expected to increase by about 1.9 million tons, mainly in India and Brazil. The ending inventory is expected to increase by 1.66 million tons. In the 25/26 period, USDA estimates that global soybean oil production will increase by 2.4 million tons [47]. - **Rapeseed and Sunflower Oil**: In the 24/25 period, global rapeseed production is expected to decrease by 4.5 million tons to 85.26 million tons, and rapeseed oil production will decline by 0.6 million tons to 31.42 million tons. Global sunflower oil production is expected to decrease by 2.7 million tons. The ending inventory of rapeseed oil is expected to increase by 0.87 million tons, while that of sunflower oil will decrease by 0.6 million tons. In the 25/26 period, the production of rapeseed and sunflower seeds is expected to increase significantly year - on - year [50][52]. 3.3 2025 Oil and Fat Demand Outlook - **China**: From January to May 2025, the cumulative apparent consumption of the four major oils decreased by 0.9 million tons year - on - year. The demand share of soybean oil increased, while the consumption of palm oil and sunflower oil decreased significantly. It is estimated that the demand for the four major oils in China in 2025 will decrease by 3 million tons compared to last year [57]. - **India**: From January to May 2025, the cumulative import of edible vegetable oils decreased by 1.2 million tons year - on - year. The reasons for the lower - than - expected demand include high domestic vegetable oil prices, suppressed speculative demand, reduced wealth effect, and the substitution of small oils. It is estimated that the cumulative import of the three major oils in India in 2025 will decrease by 0.8 million tons year - on - year [68][69]. - **EU**: In the 24/25 period, the consumption of the four major oils in the EU is estimated to decrease by 1.05 million tons. The reduction in production and high prices have led to demand rationing. The actual demand is not good, affected by both biodiesel raw material demand and edible consumption [76][77]. - **Global Biodiesel Demand Outlook**: In 2025, the total global demand for biodiesel/HVO/SAF is estimated to decrease by 50,000 tons. In terms of raw materials, the increase in biodiesel - used soybean oil is almost zero, the increase in palm oil is 1.5 million tons, rapeseed oil decreases by 0.7 million tons, and the global use of UCO decreases by 0.7 million tons [80]. - **US**: In 2026, the proposed rules will significantly benefit the demand for US soybean oil. It is estimated that the industrial demand for US soybean oil will increase by about 1.4 million tons in the 25/26 period, and about 1.2 million tons of supply will be withdrawn from the international circulation of oils [84][86]. - **Indonesia**: The B40 policy is expected to increase demand by 1.4 million tons [80]. - **Brazil**: The strong diesel demand stimulates biodiesel production, and the B14 policy is expected to increase demand by 0.45 million tons [80]. 3.4 2025 Oil and Fat Inventory Changes and Market Outlook - In the 24/25 and 25/26 periods, the ending inventory of the four major global oils is expected to continue the process of rebuilding. However, if the US EPA's proposed rules for 2026 and 2027 are implemented as expected, it will increase the demand for US soybean oil and affect the global oil and fat market [18].