Palm oil market still on edge<\/p>\n
Lewa Pardomuan, Reuters, Kuala Lumpur<\/p>\n
China will eventually use its palm oil import quotas for this
\nyear, but the timing of its purchases and how much the country is
\ngoing to buy remain a mystery, traders said on Wednesday.<\/p>\n
\"There are talks that two-third of the quota will go to
\nprivate sector and the rest to state enterprises,\" said one
\ntrader in Malaysia.<\/p>\n
\"The state enterprises will be told not to import anything
\nuntil later this year because China is harvesting repassed. The
\ngovernment doesn't want the local market to collapse,\" he added.<\/p>\n
China issued palm oil import quotas for 2002 in February,
\ntotaling 2.4 million tons, up from last year's 1.4 million tons
\nfollowing its entry to the World Trade Organization (WTO).<\/p>\n
China is expected to buy Refined, Bleached, Deodorized (RBD)
\npalm olein, which is mostly used in the country's instant noodle
\nindustry, from Malaysia and Indonesia.<\/p>\n
But the government said this week it has not delivered this
\nyear's import quotas for farm products, including wheat, corn and
\nedible oils, to trading firms and there might be a delay in the
\nMarch 5 deadline.<\/p>\n
The possible delay added to anxiety in Malaysia and Indonesia,
\nthe world's largest producers, because Chinese buyers could not
\nimport edible oil without government licensees.<\/p>\n
\"Even prominent players in China are not sure as to when the
\nimport (licenses) will be on hand,\" said one trader.<\/p>\n
China bought 1.02 million tons of palm oil from Malaysia in
\n2000, up from 800,135 tons in 1999.<\/p>\n
Traders in Indonesia said China had shunned the local market
\nfor two months due to the absence of import licences. The world's
\nsecond largest producer aims to supply 720,000 tons or around 30
\npercent of the quotas.<\/p>\n
China is seen holding the trump card that will decide whether
\nthe Malaysian palm oil futures market could touch last year's
\nhigh of 1,315 ringgit recorded on Aug.8.<\/p>\n
The benchmark May contract was four ringgit lower at 1,165
\nringgit (US$306.58) a ton at the close on Tuesday.<\/p>\n
Some traders said if Beijing did order state enterprises to
\nrefrain from importing palm oil indefinitely, China is likely to
\nabsorb 1.6 million tons of oil in 2002, slightly higher than last
\nyear's 1.4 million tons.<\/p>\n
China's repassed crop for this year was expected to rise five
\nto seven percent to a new record from 11.7 million tons last
\nyear.<\/p>\n
Traders said at least 100,000 tons of palm oil from Malaysia
\nand Indonesia were already sitting in Hong Kong, waiting for
\nBeijing to release the licences. Others said the amount reached
\nas high as 400,000 tons.<\/p>\n
Up to 80,000 tons of palm oil are now stored in bonded tanks
\non the mainland, said traders.<\/p>\n
In Pasir Gudang, one of the main ports in the peninsula,
\nstocks are also building up. Freight booking for shipment to
\nChina has reached at least 70,000 tons so far this month, said
\ntraders.<\/p>\n
Some traders speculated China would enter the market when palm
\nolein prices fell.<\/p>\n
March RBD palm olein was last quoted at $332.50\/ton FOB
\nMalaysia. Chinese buyers, however, wanted to buy olein at $332.50
\non an C&F basis, said traders.<\/p>",
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