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A senior executive at Cargill’s China unit said domestic demand for palm oil products in 2024 is expected to fall by 30% from the previous year.
The decline is linked to high palm oil prices, which have made the commodity less attractive than soybean oil, alongside sluggish demand for vegetable oils.
Benchmark Malaysian palm oil prices have risen by more than 30% so far this year, supported by lower production in Indonesia and bullish sentiment around Indonesia’s plan to expand its biodiesel mandate.
Ryan Chen, director at Cargill Investments (China), said during the Indonesian Palm Oil Conference in Bali that this is the first year in many years in which soybean oil has remained much cheaper than palm oil for a long period in China, both in the cash market and futures market.
Chen said cash refined soybean oil is around 1,000 yuan, or about $139.92, per metric tonne cheaper than refined, bleached, and deodorized (RBD) palm oil in key palm oil-consuming areas of southern China.
According to Chen, China’s palm oil imports in 2024 could fall by 45% from last year to 2.3 million tonnes, compared with 4.2 million tonnes in 2023, if the price spread between palm oil and soybean oil continues.
Imports next year are expected to range between 2.3 million and 2.4 million tonnes.
Palm oil’s share of China’s vegetable oil market is expected to fall to 12.8% in 2024, compared with 17.5% last year.
Palm oil consumption is also expected to drop below 2022 levels, when Indonesia, the world’s largest palm oil exporter, banned overseas shipments.
Source: Aswaq Information