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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

07/03/2002

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

NEWS SOURCE

NULL

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HEADLINE

CHINA KEEPS PALM OPIL MARKET IN SUSPENCE
KUALA LUMPUR, March 6 (Reuters) - China will eventually use its palm oilimport quotas for this year, but the timing of its purchases and how muchthe country is going to buy remain a mystery, traders said on Wednesday."There are talks that two-third of the quota will go to private sectorand the rest to state enterprises," said one trader in Malaysia."The state enterprises will be told not to import anything until laterthis year because China is harvesting rapeseed. The government doesn'twant the local market to collapse," he added.China issued palm oil import quotas for 2002 in February, totalling 2.4million tonnes, up from last year's 1.4 million tonnes following its entryto the World Trade Organisation (WTO).China is expected to buy Refined, Bleached, Deodorised (RBD) palmolein, which is mostly used in the country's instant noodle industry, fromMalaysia and Indonesia.But the government said this week it has not delivered this year'simport quotas for farm products, including wheat, corn and edible oils, totrading firms and there might be a delay in the March 5 deadline.The possible delay added to anxiety in Malaysia and Indonesia, theworld's largest producers, because Chinese buyers could not import edibleoil without government licences."Even prominent players in China are not sure as to when the import(licences) will be on hand," said one trader.China bought 1.02 million tonnes of palm oil from Malaysia in 2000, upfrom 800,135 tonnes in 1999.

ABSENT FROM INDONESIATraders in Indonesia said China had shunned the local market for twomonths due to the absence of import licences. The world's second largestproducer aims to supply 720,000 tonnes or around 30 percent of the quotas.China is seen holding the trump card that will decide whether theMalaysian palm oil futures market could touch last year's high of 1,315ringgit recorded on August 8.The benchmark May contract was four ringgit lower at 1,165 ringgit($306.58) a tonne at the close on Tuesday.Some traders said if Beijing did order state enterprises to refrainfrom importing palm oil indefinitely, China is likely to absorb 1.6million tonnes of oil in 2002, slightly higher than last year's 1.4million tonnes.China's rapeseed crop for this year was expected to rise five to sevenpercent to a new record from 11.7 million tonnes last year.Traders said at least 100,000 tonnes of palm oil from Malaysia andIndonesia were already sitting in Hong Kong, waiting for Beijing torelease the licences. Others said the amount reached as high as 400,000tonnes.Up to 80,000 tonnes of palm oil are now stored in bonded tanks on themainland, said traders.In Pasir Gudang, one of the main ports in the peninsula, stocks arealso building up. Freight booking for shipment to China has reached atleast 70,000 tonnes so far this month, said traders.Some traders speculated China would enter the market when palm oleinprices fell.March RBD palm olein was last quoted at $332.50/tonne FOB Malaysia.Chinese buyers, however, wanted to buy olein at $332.50 on an C&F basis,said traders.