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Agriculture Asia

SE Asian palm exporters parse China gloom for demand pointers

European and Indian palm oil buyers have come charging out of the blocks for August purchases of cheap palm oil as southeast Asian sales get back into post-Ramadan gear. Palm oil discounts to fob Dutch mill rapeseed oil pushed back towards $250/t in the first ten days of August, accompanied by a 156% rise in Malaysian palm oil exports to the EU. The 86,000t bought by Europeans however was dwarfed by the nearly 172,000t shipped to India, up from a paltry 13,000t in the first ten days of July. African buying also surged, with Malaysian exports up 400% in the first ten days of August to more than 81,000t. Palm oil discounts to EU rape oil this week have steadily edged nearer $300/t, increasing the attractiveness of palm oil imports for end-users not wedded to rape oil.

Slower MoM Chinese palm oil imports in the first ten days of August were the darkest cloud on the horizon for Malaysian sellers, with shipments down 17% MoM to just over 93,000t amid mounting concern over the country’s ability to maintain its appetite for imported commodities. Chinese demand for Indonesian palm oil also dropped in July, with shipments down 5% to 407,000t. Chinese imports from Indonesia have been in steep decline since hitting an annual 800,000t peak in April, dropping 37.5% between April and June despite plummeting prices. Malaysian exports to China also showed a spring peak, topping out at 360,000t in May before sliding to 244,000t in June. China’s July imports from Malaysia recovered MoM to 280,000t. More comfortingly, Chinese buying showed similar seasonality last year.

Both Malaysia and Indonesia still need to beat last year’s sales to mop up their combined YoY estimated 1.93mn t production increase. Combined first half exports were up 2.34mn t YoY, although the pace of the YoY increase has slackened significantly over the past two months.

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