MARKET DEVELOPMENT
19-08-2003
CHINA MAY BUY LESS PALM OIL, INDIA UNCERTAIN
KUALA LUMPUR, Aug 19 (Reuters) - China's cooking-oil inventories havestarted to build up, sending signals to local importers to curb imports asprofit margins shrink, traders said on Tuesday.In China's booming southern city of Guangzhou, for instance, stocks ofRBD palm olein were estimated at 15,000 tonnes, up from a normal 10,000tonnes a month earlier due to steady arrivals of cooking oil from mainproducers Malaysia and Indonesia, they said.China, one of the world's largest edible-oil consumers, has been anactive palm-oil buyer in the past few months as local importers havereplenished stocks ahead of the Mid-Autumn festival in September. Sometraders believed the Chinese market was a bit overbought."We are offering olein at 4,920 yuan ($594.42) a tonne but it will godown. The inventories in Guangzhou are too high. It's about 15,000tonnes," said one trader in China."People bought a lot of oil last month because the margins were huge at250 yuan a tonne. But cargoes keep arriving and the margins have gone downto between 50 and 150 yuan this month," he added.Kuala Lumpur freight brokers said China's shipment bookings forMalaysian/Indonesian palm oil for August were estimated at between 300,000and 350,000 tonnes. China bought 305,042 tonnes of Malaysian palm oil inJuly, according to cargo surveyor SGS."I reckon China's shipment booking for August is still quite healthy.September will be a scary month... I mean their imports will be damn slowbecause I heard there's no margin anymore in China," said one freightbroker.Some traders said China's imports in September could fall to 250,000tonnes, adding that consumers would avoid using RBD palm olein duringwinter because it solidifies."China imports in October will drop a lot. There's a rush in importsahead of the Mid-Autumn festival but I think local demand has started toweaken," said the trader in China.Traders said India, the world's largest edible-oil consumer, alsoshowed signs of slowing down. India buys palm oil from Malaysia andIndonesia."Shipment booking for August may reach 300,000 to 350,000 tonnes, but Idon't expect India to take more than 300,000 tonnes in September becausethe carotenoid issue is not resolved yet," said one trader.But traders said India's soyoil imports were seen steady at 200,000tonnes in August. Rival soyoil commands a premium of around $60 a tonne topalm oil.India has said imports of crude palm oil and crude olein must now havean acid value of two percent and a carotenoid value of 500 to 2,500milligrams per kg. Carotenoids are pigments found in plants.Traders said carotenoid content in Malaysian/Indonesian crude palm oiland crude olein was mostly below 500 milligrams per kg. This has forcedIndian importers to switch to refined products such as olein or refrainingfrom taking fresh positions.
