KUALA LUMPUR (July 09 2003) : China, a key buyer of Malaysian palm oil,has bought enough cooking oil to meet July and August demand, and ishoping for weaker palm oil prices before buying more, traders said onTuesday.
At least 280,000 tonnes of RBD palm olein, which is used as cooking oil,had been booked for shipments to China this month, up from 260,000 tonnesin June, they said. Shipments in August were also seen steady at 280,000tonnes.
"China is well-covered for July and August. Edible oils stocks aresufficient and local prices have come down," said one trader in China,adding that olein was quoted at 5,000 yuan ($604.08) a tonne, down from5,350 yuan two weeks ago.
China has been an active buyer in the past few months to meet domesticdemand during the summer months and to replenish dwindling stock. Sometraders said the Sars outbreak had encouraged locals to use more edibleoils than animal fats.
China was Malaysia's main palm oil importer in June, buying 249,512 tonnesof oil, up from 236,882 tonnes in May, according to cargo surveyor SGS.
It also buys palm oil from Indonesia, the world's second-largest producerafter Malaysia.
But traders said China's appetite for palm oil from September would bedetermined by price movements in Malaysia's crude palm oil futures,struggling to trade above the 1,400 ringgit support.
China has also bought plenty of soyaoil from South America and traderssaid the country's locally-produced rapeseed was now available in thedomestic market.
"China still has some interest in palm oil but the question is how muchthey are going to buy. This also depends on prices," said one freightbroker.
Private forecaster Ivan Wong said June Malaysian palm oil output wouldrise to 1.21 million tonnes from 1.17 million tonnes in May. Julyproduction was seen at 1.27 million tonnes.
End-June stocks were seen at 1.01 million tonnes while end-July stockswere estimated at 1.11 million tonnes.
By midday on Tuesday, benchmark third-month futures contract Septemberwere five ringgit higher at 1,422 ringgit ($374.21) a tonne on fears oftightness in the physical sector.
Traders said some big refiners in Malaysia could be holding back stocks toprevent prices from falling below 1,400 ringgit.
Freight brokers said India, the world's largest edible oils consumer,still showed a strong interest in palm oil, adding that the country wasexpected to import 350,000 tonnes in July.-Reuters