The one per cent fall in palm oil purchase from Malaysia does not necessarily imply China is a saturated market, says Malaysian Palm Oil Council.
Malaysia’s 23-year record of rising palm oil exports to China ended last year when shipments dipped by 1 per cent to 3.8 million tonnes.
However, there is no need to be alarmed, said Malaysian Palm Oil Council (MPOC) chief executive Tan Sri Yusof Basiron.
“The slight 50,000 tonnes dip in palm oil purchase from Malaysia does not necessarily imply China is a saturated market,” he told Business Times in an interview recently.
“There is still room for growth in China’s demand for Malaysian palm oil. There are more than 1.3 billion people there and many have big appetite for tasty food,” he said.
He explained that last year’s dip was caused by extreme market volatility as prices fell for seven months from April.
It hit a low of RM1,390 per tonne at the end of October and traded sideways for two months. Soon after Christmas, it began to climb and is now trading at around RM1,900 per tonne.
The yoyo-like price movement had caused much uncertainty and disrupted vegetable traders’ forward purchase decisions. Many orders to China were deferred, especially in f August to October.
“Also, Chinese vegetable oil trading houses, like other businesses there, were facing challenges in securing trade facilities from the banks,” he said.
Yusof then stressed that the global palm oil market had recently taken a positive turn. Last month, there was a surge in palm oil shipments and stock levels reduced drastically.
“In the past, the carry-on stock levels ranged between 500,000 and 600,000 tonnes. This year, the stock level reduced to between 200,000 and 300,000 tonnes,” he said. When asked to forecast on palm oil exports to China, he replied, “we should be able to do four million tonnes this year. It is not a problem.”
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