KUALA LUMPUR: China is expected to import between 6.7 million tonnes and 7.1 mil tonnes of palm oil in 2021, owing to the tightness in the country's vegetable oil.
Cargill Investments (China) Ltd China CNF business director (oils & softseeds) Ryan Chen said many Chinese investors were trading the inflation story on commodities.
"Fundamentally, they watch the nearby soybean oil tightness and palm producing recovering pace very closely.
"Strong soft oil price will provide support to palm price but the forthcoming production recovery on palm shall be closely monitored," he said at the Virual Palm and Lauric Oils Price Outlook Conference 2021 (Virtual POC2021), here today.
He expected soybean oil tightness to remain in the coming months, providing strength to palm oil.
Bursa Malaysia Derivatives Bhd chief executive officer Samuel Ho said the reduction in palm oil exports was short-lived although the Covid-19 pandemic partial lockdowns imposed globally had curbed demand for edible oils.
"By the second quarter of 2020, key importing countries had started to re-stock. The crude palm oil rally since June 2020 was driven by supply disruptions in key edible oils as well as palm oil-producing regions," he said.
Ho said with demand outpacing supply, Bursa Malaysia Derivative's three-month benchmark price surpassed RM3,000 by end-October 2020, 38 per cent higher year-on-year.
"Trading volume in our derivatives market continues to see remarkable growth amid the volatile environment. In 2020, 365 million tonnes of palm oil were traded, which was about 19 times of world production," he added.