26/08/2008 (The Edge Daily), Kuala Lumpur - The default of some palm oil cargoes meant for China and India in the past few weeks following a slump in crude palm oil (CPO) prices was not as severe as reported, the Palm Oil Refiners Association of Malaysia (Poram) acting chairman Yong Chin Fatt said.

"There have been some defaults or deferment of palm oil shipments, but a default of 800,000 tonnes to one million tonnes of palm oil is impossible. This could be an intention by certain parties to depress the market," he said.

India and China, both major buyers of edible oils, were reported to have cancelled or deferred the shipment of around 800,000 tonnes of palm oil in the past few weeks as the price of the commodity nosedived on Aug 15 to RM2,392 a tonne on Bursa Malaysia Derivatives.

The price of crude palm oil has lost around 42% from its record high of RM4,486 a tonne in March.

While Yong admitted there were some defaults of palm oil shipments, he said the cancellation had not "reached a stage of massive defaults".

"Most of the palm oil buyers are established customers. Hence what we are seeing is a rescheduling of the shipments. Instead of large shipments, they would be spread over a few months, resulting in a smaller shipment of palm oil," he said on the sidelines of the Second International Palm Oil Trade Fair and Seminar 2008 (POTS 2008) here yesterday.

According to an earlier Reuters report, importers had defaulted on about 300,000 tonnes of palm oil, while deals involving some 500,000 tonnes were renegotiated, with traders paying a lower price than what was initially agreed on.

Buyers from China were reported to have defaulted on some 40,000 tonnes of refined bleached deodorised palm olein cargo on Aug 15, while Indian buyers had backed out from purchases of close to 200,000 tonnes of edible oils following the slump in market prices.

"Malaysia is a major exporter of palm oil to China while India buys palm oil from Indonesia. Therefore I do not think the defaults were as severe as reported," Yong said.