AIRLINK 212.82 Increased By ▲ 3.27 (1.56%)
BOP 10.25 Decreased By ▼ -0.21 (-2.01%)
CNERGY 7.00 Decreased By ▼ -0.35 (-4.76%)
FCCL 33.47 Decreased By ▼ -0.92 (-2.68%)
FFL 17.64 Decreased By ▼ -0.41 (-2.27%)
FLYNG 21.82 Decreased By ▼ -1.10 (-4.8%)
HUBC 129.11 Decreased By ▼ -3.38 (-2.55%)
HUMNL 13.86 Decreased By ▼ -0.28 (-1.98%)
KEL 4.86 Decreased By ▼ -0.17 (-3.38%)
KOSM 6.93 Decreased By ▼ -0.14 (-1.98%)
MLCF 43.63 Decreased By ▼ -1.57 (-3.47%)
OGDC 212.95 Decreased By ▼ -5.43 (-2.49%)
PACE 7.22 Decreased By ▼ -0.36 (-4.75%)
PAEL 41.17 Decreased By ▼ -0.53 (-1.27%)
PIAHCLA 16.83 Decreased By ▼ -0.47 (-2.72%)
PIBTL 8.63 Increased By ▲ 0.08 (0.94%)
POWERPS 12.50 No Change ▼ 0.00 (0%)
PPL 183.03 Decreased By ▼ -6.00 (-3.17%)
PRL 39.63 Decreased By ▼ -2.70 (-6.38%)
PTC 24.73 Decreased By ▼ -0.44 (-1.75%)
SEARL 98.01 Decreased By ▼ -5.95 (-5.72%)
SILK 1.01 Decreased By ▼ -0.02 (-1.94%)
SSGC 41.73 Increased By ▲ 2.49 (6.35%)
SYM 18.86 Decreased By ▼ -0.30 (-1.57%)
TELE 9.00 Decreased By ▼ -0.24 (-2.6%)
TPLP 12.40 Decreased By ▼ -0.70 (-5.34%)
TRG 65.68 Decreased By ▼ -3.50 (-5.06%)
WAVESAPP 10.98 Increased By ▲ 0.26 (2.43%)
WTL 1.79 Increased By ▲ 0.08 (4.68%)
YOUW 4.03 Decreased By ▼ -0.11 (-2.66%)
BR100 11,866 Decreased By -213.1 (-1.76%)
BR30 35,697 Decreased By -905.3 (-2.47%)
KSE100 114,148 Decreased By -1904.2 (-1.64%)
KSE30 35,952 Decreased By -625.5 (-1.71%)

Growth in China's palm oil imports, under pressure due to a slowing economy, will suffer another setback this year as the country taps into ample global supplies of the rival oilseed soyabean to feed its expanding livestock sector.
Any dent to palm oil purchases by the world's No 2 consumer will add to pressure on benchmark prices of the tropical oil that are currently near one-month lows. The market has shed 3 percent this month in the absence of an expected rise in Chinese demand ahead of Lunar New Year celebrations in February. With China's economic growth seen cooling to its slowest pace in 25 years, its demand for most commodities has been hit, but palm oil faces a double whammy, said Pawan Kumar, director of Rabobank Singapore. "It is also losing out to soyaoil given China's preference for soyabean for its livestock industry."
China has significantly ramped up its capacity to crush soyabeans for animal feed in a bid to maintain a steady supply of pork, of which the country is the world's biggest consumer.
But as soyabeans yield both meal and soyaoil, crushing more means a lot of vegetable oil will also be churned out, chipping away at China's need for palm oil. "As a result, whatever growth there will be for vegetable oil demand in China will be for soyaoil. This pretty much can be solved by additional crushing. In that scenario, it's hard to see any import growth on the palm side," said Kumar. He expects China's purchases of the tropical oil to hold steady at 5.8 million tonnes in the year to September 2016, after growing only 2 percent in 2014/15.
CHINA TO USE MORE SOYAOIL China is expected to use 7.8 percent more soyaoil in 2015/16 and 0.4 percent more palm oil, US Department of Agriculture (USDA) data shows. This compares to a rise of 3.4 percent and 1 percent, respectively, a year ago.
Much of the change in the pattern of consumption will be driven by China's soyabean crushing capacity that is expected to increase 10 percent to 179 million tonnes in 2016.
As domestic soyabean output is not enough to meet crushing needs, China's imports of the oilseed are likely to climb from an all-time high of 81.69 million tonnes reached in 2015.
Aiding its purchases will be ample Latin American supplies and a cut in Argentina's tax on soyabean exports. Palm oil is already facing competition as its discount to soyaoil has narrowed in recent months due to large stockpiles of soyabeans from Argentina. "Palm oil consumption is not going to disappear, but we are seeing a shift in its overall share of China's vegetable oil use," said Aurelia Britsch, a senior commodities analyst at BMI Research in Singapore. "In the coming years, palm oil consumption and import growth are unlikely to match the growth seen in the 2000s when imports expanded at double-digit rates on an average annually."

Copyright Reuters, 2016

Comments

Comments are closed.