KUALA LUMPUR: There are signs that China’s palm oil imports, which have fallen in recent years, are picking up again, said the Malaysian Palm Oil Council (MPOC).
“There are many reasons for the slowdown in palm oil orders from China in the last few years. What is important and reassuring is that we are seeing signs of recovery in purchase orders in the last three months,” said MPOC chief executive officer Tan Sri Dr Yusof Basiron.
“We are seeing month-to-month pick-up in demand from China. We hope to see this encouraging trend pick up in the months ahead as global palm oil supply remains tight due to biodiesel mandates in Indonesia and Malaysia,” he told Business Times in an interview.
In recent years, China imported more oilseeds to make up for the stagnating output of its locally-produced rapeseed and soyabean.
The scarcity of arable land in China is forcing the government to focus on grains for food security.
The growing demand of imported oilseeds is fuelled by more meat consumption among the middle class.
Oilseeds are crushed for its meal as animal feed rather than for its oil. Each tonne of crushed soyabean produces only 20 per cent of oil versus 80 per cent of .
The import duty differential between soyabean of three per cent and soyabean oil of nine per cent is encouraging higher oilseed imports for animal feed.
MPOC’s representative in Shanghai, Desmond Ng, said China’s rapeseed oil reserves currently stand at around three million tonnes.
By the end of this month, the level is expected to settle further to 2.5 million tonnes as the state releases more stocks.
“Going forward, the China government will continue to auction approximately 100,000 tonnes of rapeseed oil every week.
“In the first quarter of next year, we should see offloading of some 1.5 million tonnes from the national reserves,” he said.
China’s demand for oils and fats is positively correlated to its economic growth. Its real gross domestic product growth of around seven per cent is expected to spur additional demand of 500,000 tonnes of oils and fats per year.
“China’s palm oil reserves have been coming down steadily as domestic consumption remains firm. We should be able to see higher purchase order of palm oil by the second quarter of next year,” Ng added.