Foreign media, February 9: Industry sources said on Monday that China's demand for palm oil will decline further this year as buyers shift to cheaper alternatives like rapeseed oil and soybean oil.

Anikuma Bagni, research head at Mumbai-based broker Sunvin Group, stated that China's recent trade agreement with Canada enables cheaper canola oil imports. Additionally, increased purchases of Australian rapeseed alongside higher soybean imports and crushing volumes will significantly impact China's palm oil imports this year.

An analyst from a major Malaysian plantation noted that while Chinese demand has risen ahead of the festive season, China has other options like rapeseed oil and soybean oil, so palm oil imports won't be as high as before. China will begin celebrating its nine-day Spring Festival holiday starting February 15.

The analyst added that China's palm oil procurement has been scaled back to meet only core demand due to significant price differentials across oil contracts. Compared to India, China has more procurement options, making its demand for palm oil less urgent. Chinese buyers are also closely monitoring vegetable oil price trends on the Dalian Commodity Exchange.

More competitive Indonesian palm oil prices have also impacted Malaysia's palm oil exports to China. Malaysia's Palm Oil Board (MPOB) reported a 35.7% decline in palm oil exports to China last year.

However, Indonesia's plan to raise palm oil export levies in March may boost Malaysian exports.

An Indonesian analyst forecasts a slight decline in palm oil prices this year due to robust palm and soybean oil production. Nevertheless, China will continue increasing soybean oil imports, which will limit demand for palm oil.

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