Kuala Lumpur, 3 January, 2002 - CHINA is announcing palm oil import quotaearly this year, with the first batch of 500,000 tonnes expected to beannounced next week.Traders said China is pressured to buy more palm oil fast by its WorldTrade Organisation’s (WTO) commitments and higher demands triggered by theLunar Year celebrations next month.Traders said the issuance of the quota to both its state-run importers andthe private sector is imminent as currently palm oil and soyabean oil arethe only available edible oils in the world market.China imposed a quota of 1.4 million tonnes last year which was increasedto 2.4 million tonnes this year in line with its entry as the 143rd memberof the WTO last month.Other edible oils include rapeseed, sunflower, sesame, groundnut andcotton oil.“The quota is expected to be announced in the first week of Januarybecause China has been consistently importing 200,000 tonnes of Malaysia’spalm oil for the past several months,” a trader told Business Times inKuala Lumpur.“Coupled with fantastic exports to other traditional buyers such as India,Pakistan and the European Union, and low seasonal output for the next fewmonths, this development augurs well for Malaysia,” the trader said.He added that talks by several plantation companies of being hit by theon-going floods also contribute to the already tightening supply.Independent cargo surveyor Societe Generale de Surveillance (SGS) Sdn Bhdhad estimated December exports to drop to 1.04 million tonnes, comparedwith 1.05 million tonnes in November.According to SGS, the bulk of exports went to China at 207,784 tonnes,India (202,175 tonnes), Pakistan (88,450 tonnes) and the European Union(195,463 tonnes).The Malaysian Palm Oil Board, Malaysia’s palm oil regulator, is expectedto release official December palm oil production, export and stockpilefigures on January 12.“Even though crude palm oil (CPO) exports recorded a slight drop,nevertheless it is still encouraging in view of the current low productionmonths.“As long as exports are maintained at between 950,000 tonnes and onemillion tonnes until March, it is good news for Malaysia,” said thetrader. He added that the CPO industry’s outlook also appears good forMalaysia in which production is expected to decline by 10 per cent in themonths of January, February and March, respectively, before it picks upagain in April.“And Malaysia’s rival, Indonesia, is also expected to be out of therunning in pursuing the quota as it battles low seasonal output andincreasing domestic demand,” the trader said.For the last year’s 1.4 million-tonne quota, traders said up till June,some 70 per cent or 700,000 tonnes went to Malaysia, with the balancegoing to Indonesia.Traders and industry observers estimate that Malaysia stand to rake in atleast 70 per cent or 1.68 million tonnes of the 2.4 million quotaallocated this year.“And China is expected to issue its second quota for the year of another500,000 tonnes in March,” said another trader.However, he said China would need to study the declining production ofrapeseed and sunflower oils in Argentina and Brazil before issuing thequota.“If the situation there remains tight, then perhaps the quota might beincreased,” he said.China is Malaysia’s third biggest CPO buyer of which it bought 1.02million tonnes last year. India was the largest buyer at 2.03 milliontonnes followed by the European Union at 1.03 million tonnes.Traders also dismissed the possibility of Malaysia’s palm oil exports toIndia and Pakistan being disrupted as the threat of war between the twocountries escalates.“I don’t think war will break out. In this case, the US will tell India tocool it because the US still needs Pakistan as its closest ally to huntdown Osama bin Laden, its number one suspect of the terrorist attacks onNew York and Washington,” the trader said.