MARKET DEVELOPMENT
Wilmar Says China's Palm Oil Imports Under Pressure in Short Term
Wilmar Says China's Palm Oil Imports Under Pressure in Short Term
09/08/2014 (Reuters) - Singapore's Wilmar International, the world's largest palm oil processor, expects China's palm oil imports will be affected in the short term as a crackdown on the commodity financing trade curbs speculative imports.
Kuok Khoon Hong, Wilmar's chairman and chief executive officer, said on Friday he estimates that more than half of China's palm oil imports were for financing purposes.
"Some of the palm oil sellers to China will tell you many of their buyers are having trouble getting credit, or delays in getting credit," Kuok told reporters and analysts at a briefing the day after the company reported a sharp drop in second-quarter net profit.
In the latest phase of China's crackdown, authorities are investigating alleged metal financing fraud at the port of Qingdao, which has prompted global banks and trading houses to fire off a series of law suits.
China, the world's No.2 buyer of the vegetable oil, imported 2.9 million tonnes of palm oil in the first half of 2014, nearly flat from a year earlier, official trade data showed. Palm oil imports grew 8 percent on the year for the first half of 2013.
Kuok said China has a palm oil inventory of about 1 million tonnes, which is expected to decline as the trade normalises.
The executive also said that Wilmar is not interested in buying the palm oil assets of trading company Noble Group Ltd , after a plan by the two firms to jointly develop oil palm plantations stalled last year.
"Oil prices will be depressed for a year or two, and it's not a good time to buy (palm oil plantations) right now," said Kuok.
The benchmark palm oil futures contract on the Bursa Malaysia Derivatives Exchange slipped to a one-year low of 2,234 ringgit ($696) per tonne, as expectations of higher output weighed.
Shares of Wilmar, the biggest listed agricultural products company in the Asia-Pacific region by market capitalisation, dropped to a near three-week low of S$3.19 on Friday.
(1 US dollar = 3.2085 Malaysian ringgit)
Kuok Khoon Hong, Wilmar's chairman and chief executive officer, said on Friday he estimates that more than half of China's palm oil imports were for financing purposes.
"Some of the palm oil sellers to China will tell you many of their buyers are having trouble getting credit, or delays in getting credit," Kuok told reporters and analysts at a briefing the day after the company reported a sharp drop in second-quarter net profit.
In the latest phase of China's crackdown, authorities are investigating alleged metal financing fraud at the port of Qingdao, which has prompted global banks and trading houses to fire off a series of law suits.
China, the world's No.2 buyer of the vegetable oil, imported 2.9 million tonnes of palm oil in the first half of 2014, nearly flat from a year earlier, official trade data showed. Palm oil imports grew 8 percent on the year for the first half of 2013.
Kuok said China has a palm oil inventory of about 1 million tonnes, which is expected to decline as the trade normalises.
The executive also said that Wilmar is not interested in buying the palm oil assets of trading company Noble Group Ltd , after a plan by the two firms to jointly develop oil palm plantations stalled last year.
"Oil prices will be depressed for a year or two, and it's not a good time to buy (palm oil plantations) right now," said Kuok.
The benchmark palm oil futures contract on the Bursa Malaysia Derivatives Exchange slipped to a one-year low of 2,234 ringgit ($696) per tonne, as expectations of higher output weighed.
Shares of Wilmar, the biggest listed agricultural products company in the Asia-Pacific region by market capitalisation, dropped to a near three-week low of S$3.19 on Friday.
(1 US dollar = 3.2085 Malaysian ringgit)