China Demand for Palm Oil to Pick Up

YOGYAKARTA: China will order more palm oil cargoes from July

onwards to stock up for the festivals starting from September,

southeast Asian exporters and Chinese traders said yesterday.

Palm oil imports by the world’s No. 2 vegetable oils buyer will show

only modest growth thanks to a high soyabean crush, although China’s

trade freeze on Argentine soyaoil may give an upside to palm oil, they


China tends to build up stocks two to three months

ahead of festivals and this year the Mid-Autumn festival falls on the

third week of September, while the National Day holiday is stretched

over the first week of October.

It gets the bulk of its palm

oil needs from Malaysia, the second largest palm oil producer in the

world, although imports are increasingly coming from top supplier


“Demand is not in dire straits,” a Malaysian trader said on the

sidelines of an industry conference in this Indonesian city.

But stocking up for festivals in July could see the palm oil futures

recoup some losses and comes at a time when output, particularly in

Malaysia, recovers after months of prolonged yield stress.

“I suspect the Chinese are waiting for the market to go down further,

so they can come in and make a killing,” an Indonesian palm oil trader


“My associate company in Malaysia has received many

enquiries from the Chinese and they have also called us in Indonesia.

They are timing their purchases very wisely.”

China this

week bought refined, bleached and deodorised palm olein at

US$805-US$810 (RM2,632-RM2,650) a tonne, cost and freight (C&F),

Malaysian and Indonesian dealers said. The product is processed into

cooking oil and used for manufacturing noodles and sweets.

Planters with extensive refinery businesses and estates in Malaysia and

Indonesia such as Singapore’s Wilmar International as well as

Malaysia’s IOI Corp and Kuala Lumpur Kepong trade regularly with


However, traders said India’s palm oil imports ahead of

its festival season will tumble 30 per cent to 1.13 million tonnes for

July-September shipments from a year ago, on a high domestic oilseed


India, the world’s largest consumer of vegetable oils,

will mark a string of religious events, starting with the Muslim holy

month of Ramadan in August and ending with the Hindu festival of Diwali

in November.

Last year in the July-September run up, India

bought a record 1.6 million tonnes of palm oil products that consist

mainly of crude palm oil with smaller quantities of refined palm olein

and palm kernel oil, industry data showed.

“We are not going

to make much of an impact on India this year,” said an Indonesian palm

oil exporter.

“Although we still have market share, the Indian

middle class can now afford to pay the slight premium for soyaoil since

the economy is strong and there are ample soyaoil supplies that

brought down the prices.” – Reuters

Source : Business Times

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