MARKET DEVELOPMENT
Low Stockpile, Moon Cake Festival To Boost Palm Oil Demand From China
Low Stockpile, Moon Cake Festival To Boost Palm Oil Demand From China
12/08/2016 (Bernama) - Palm oil imports and demand in the second largest consumer of edible oil, China, is expected to increase this year, bolstered by low stockpile and the increase in demand for the Moon Cake Festival.
Malaysian Palm Oil Council Chief Executive Officer, Tan Sri Yusof Basiron, said the sentiment in the next few months should get better now that the Malaysian palm oil stock has fallen by 0.23 per cent to 1.77 million tonnes in July against against 1.77 million tonnes in the previous month.
"The buying momentum has to re-continue in terms of volume, as the stock of palm oil in China has come down over the last six months, so this has forced them to buy back to replenish their stocks, and of course for new consumption, additional demand is coming up due to festive season," Yusof told Bernama.
He said for the period of January-May, 2016, China bought only 514,553 tonnes of palm oil from Malaysia, lower by 44.66 per cent, or 415,182 tonnes, in the same period last year.
This drop was due to several factors affecting the demand, such as China's usage of two million tonnes of their rapeseed stockpile into its market, hence there has been plenty of supply during the first half of this year, said Yusof.
"China had six million tonnes of rapeseed, out of which two million tonnes were released during that period, so they imported less from us," he added.
During the same period, Basiron said, the premium of soyaoil has come down to be very small compared to palm oil, hence people had the opportunity to buy more soyaoil because its price has come down close to palm oil.
"So when the premium of soyaoil became small, people preferred to buy more soyabean," he said.
China also import lots of soyabean for their animal feed, he said, adding that the oil produced from the soyabean also helped to increase soya supply in the market.
Other factors that dampened the market were the competition between Malaysian palm oil and Indonesian palm oil price which was often at a discount due to its tax structure, he said.
"This erodes the Malaysian palm oil share due to the undercutting by the Indonesian sellers," Yusof said.
From January to May 2016, Malaysia palm oil accounted for only 31.60 per cent of total palm oil supplies, which were still lower compared to the 48.37 per cent in 2015, while Indonesia grabbed 68.09 per cent of market share.
Palm production is a key part of Malaysia's economy, accounting for nearly six per cent of its total exports last year.
Malaysia has always been a supplier of reliable and affordable edible oils to China, he said.
Malaysian Palm Oil Council Chief Executive Officer, Tan Sri Yusof Basiron, said the sentiment in the next few months should get better now that the Malaysian palm oil stock has fallen by 0.23 per cent to 1.77 million tonnes in July against against 1.77 million tonnes in the previous month.
"The buying momentum has to re-continue in terms of volume, as the stock of palm oil in China has come down over the last six months, so this has forced them to buy back to replenish their stocks, and of course for new consumption, additional demand is coming up due to festive season," Yusof told Bernama.
He said for the period of January-May, 2016, China bought only 514,553 tonnes of palm oil from Malaysia, lower by 44.66 per cent, or 415,182 tonnes, in the same period last year.
This drop was due to several factors affecting the demand, such as China's usage of two million tonnes of their rapeseed stockpile into its market, hence there has been plenty of supply during the first half of this year, said Yusof.
"China had six million tonnes of rapeseed, out of which two million tonnes were released during that period, so they imported less from us," he added.
During the same period, Basiron said, the premium of soyaoil has come down to be very small compared to palm oil, hence people had the opportunity to buy more soyaoil because its price has come down close to palm oil.
"So when the premium of soyaoil became small, people preferred to buy more soyabean," he said.
China also import lots of soyabean for their animal feed, he said, adding that the oil produced from the soyabean also helped to increase soya supply in the market.
Other factors that dampened the market were the competition between Malaysian palm oil and Indonesian palm oil price which was often at a discount due to its tax structure, he said.
"This erodes the Malaysian palm oil share due to the undercutting by the Indonesian sellers," Yusof said.
From January to May 2016, Malaysia palm oil accounted for only 31.60 per cent of total palm oil supplies, which were still lower compared to the 48.37 per cent in 2015, while Indonesia grabbed 68.09 per cent of market share.
Palm production is a key part of Malaysia's economy, accounting for nearly six per cent of its total exports last year.
Malaysia has always been a supplier of reliable and affordable edible oils to China, he said.