Credit: REUTERS/LIM HUEY TENGBy Mei Mei Chu
KUALA LUMPUR, March 3 (Reuters) - The world's biggest palm oil buyers China and India are slowing down imports as prices rocket to historical high levels, even as Russia's invasion of Ukraine disrupts global edible oil supply, industry officials said on Thursday.
Malaysia's benchmark crude palm oil prices FCPOc3 have soared 45% so far this year, boosted by a cocktail of labour shortages, export restrictions by top producer Indonesia and disruption to sunflower oil supply from Russia's invasion of Ukraine.
"We have crossed the biting point and now we're at the boiling point," Sudhakar Desai, president of the Indian Vegetable Oil Producers' Association (IVPA) told an industry webinar.
The Ukraine crisis has created panic in the market, Desai said.
India's vegoil stockpile is covered for about 45 to 50 days, after which companies will find alternatives to sunflower oil, but their purchase of pricey palm will be "limited and cautious", he said.
The pace of India's crushing of soybeans and mustard seeds will increase to meet demand, Desai said, adding that "India is not going to build stocks."
He pegged the country's palm oil imports in the 2021/22 oil year at 7.63 million tonnes, down from 8.89 million tonnes in 2020/21.
China's palm oil imports are also expected to be flat at 6.7 million tonnes in 2022, compared to 6.63 million tonnes in the year before, according to Desmond Ng, chief representative for the Malaysian Palm Oil Council in China.
"There is a strong need for China to restock vegetable oils. The demand should be strong but high prices have deterred buying interest," Ng said.
The composition of palm products imported in 2021 witnessed a shift from palm stearin to hydrogenated palm stearin, and palm olein to shortening, Ng said, due to the difference in import and export duties.
This pattern will repeat this year as traders find ways to circumvent high prices, he said.
Desai forecast palm oil prices between 6,000 and 7,500 ringgit ($1,434 and $1,792) per tonne in the next three months, and 4,800 to 5,500 ringgit per tonne in the next six months.
($1 = 4.1845 ringgit)
(Reporting by Mei Mei Chu; Editing by Martin Petty)
((meifong.chu@thomsonreuters.com; +603-2333-8005; Reuters Messaging: @meixchu on Twitter))
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