KUALA LUMPUR: Malaysia’s commodities minister on Tuesday warned that its palm oil exports to China will continue to be affected by global economic challenges and overall imports in the world’s second-largest buyer will likely decline.

Malaysia’s exports to China during the first half of the year have already plunged 24% from the same period last year, as sky-high prices due to global edible oil shortages discouraged stockpiling, according to Malaysian Palm Oil Board data.

China’s Foreign Minister Wang Yi during a visit to Malaysia last week said China is ready to import more palm oil and other agricultural products.

In a statement on Tuesday, Malaysia’s commodities minister Zuraida Kamaruddin said the ministry is optimistic China will increase its palm oil imports despite current global challenges.

However, she warned it is unlikely for China’s total global imports in 2022 to come close to the volume recorded last year, citing a high-interest rate environment, inflationary pressures, and recession concerns.

Palm oil may retest resistance at 3,782 ringgit

Zuraida estimated China’s total palm oil imports in 2022 at 4.8 million tonnes, based on the assumption that import volumes during the second half of the year are on par with the previous year.

“A few factors that influence the prices of palm oil, like the demand from downstream sectors, the soybean situation in China, Indonesia’s policies to curb domestic palm oil price hikes, and tightness in the supply of global edible oils, will continue to affect the prospects of China’s palm oil imports from Malaysia,” Zuraida said.

Malaysia’s benchmark crude palm oil prices have in recent weeks tumbled to levels seen before Russia-Ukraine conflict, which triggered global edible oil shortages. It traded at 3,904 ringgit ($876.12) a tonne on Tuesday afternoon.