China’s demand for palm oil is expected to further decline this year as the country shifts to cheaper canola and soybean alternatives.
China’s recent trade deal with Canada has enabled imports of cheaper canola oil along with increased purchases of Australian canola, and coupled with higher soybean imports and crushing activity, will significantly impact palm oil imports this year.
Chinese demand has been rising due to the festive season, though imports will not be as high as before as they have other options like canola and soybean.
Chinese demand has been reduced to core demand only due to the large disparity between contract prices.
The competitive prices from Indonesian palm oil has also affected Malaysia’s palm oil exports to China.
The Malaysian Palm Oil Board (MPOB) reported that exports to China fell 35.7 per cent last year.
However, Malaysia could take advantage of Indonesia’s levy hike plan, scheduled in March.
An Indonesian analyst expects palm oil prices to slightly decline this year as strong palm output and strong soyoil output weighed down on the market.
