China to reduce palm oil imports in 2021-22 as it eyes vegoil self-reliance
China is expected to lower its palm oil purchases in the 2021-22 marketing year, spanning October 2021-September 2022, as it looks to ramp up domestic edible oil production — a move that can help reduce reliance on vegetable oil imports.
China’s Agriculture Outlook Committee, or CAOC, lowered its forecast for 2021-22 palm oil imports to 4.2 million mt from the 2020-21 estimate of 4.5 million mt, according to the Chinese Agricultural Supply and Demand Estimates, or CASDE, report released May 13.
This was contrary to a May 12 report by the US Department of Agriculture’s Foreign Agricultural Service, which sees China’s 2021-22 palm oil imports to grow to 7.2 million mt, up almost 6% from 2020-21 levels.
China is the world’s second-largest palm oil importer after India.
Price estimates for palm oil in the 2020-21 year remain unchanged at Yuan 6,600-7,600/mt ($1,022.86-$1,177.84/mt), according to the CASDE report, an indication that it sees is no immediate letup in palm oil prices that are trading at record highs on the benchmark Malaysian futures market.
Vegoil production ramps up
In the last year, China has doubled down on efforts to increase reliance on domestic harvests of soybean to make soybean oil — its most-consumed cooking oil — and also for soybean crush, an essential component for its recovering hog herd.
For the current year, the May CASDE report raised its production estimate of edible oils to 29.03 million mt from the April estimate of 28.49 million mt, with growth coming mainly from domestic production of soybean oil, along with growth in peanut oil and rapeseed oil production.
In 2021-22, CAOC expects edible oil production to increase further to 29.57 million mt.
Soybean, rapeseed and groundnut oil are the most produced edible oils in China, and soybean oil accounts for 60% of its domestic oil production.
The world’s second-largest economy is heavily dependent on soybean purchases as it processes more than 80% of imported beans into animal feed, mostly used to cater its vast pig farming industry.
India’s palm oil imports lag
Indian palm oil imports for April were lower than expected as pandemic-led movement restrictions in many parts of the country dampened consumption, leading to hand-to-mouth buying by bulk buyers, industry sources said.
April crude palm oil imports clocked in at 701,795 mt, the Solvent Extractors’ Association of India said in its monthly report May 12. This was lower than the 705,269 mt of CPO imports expected by India-based vegetable oil broker Sunvin Group.
India imports about 8 million-9 million mt of palm oil in a year, most of it in its crude form as import duties on processed palm oil products are higher than those on CPO.
“We expect no significant rise in consumption this season … restrictions on movement have trimmed down India’s total [annual] edible oil consumption by around 400,000 mt-600,000 mt,” Ravindra Rao, head of commodity research at Kotak Securities, told S&P Global Platts.