Palm oil inventory held at ports in China, the second-biggest importer, expanded to a record last month driven by slow growth in demand and after the biggest-ever purchases in December, according to a Bloomberg survey.
Shipments stored at large ports rose to 1.4 million metric tonnes from 1.2 million tonnes in January, according to the median of a survey of three researchers and one trader yesterday. Buyers in China may slow purchases further to absorb the supply that’s accumulated, they said. A separate estimate today from researcher Grain.gov.cn put the reserves at 1.22 million tonnes.
The inventory in China adds to a glut in the world’s most-used cooking oil, which is caught in a bear market as supply expands to the biggest ever. Reserves in Malaysia, the largest producer after Indonesia, reached an all-time high in December. Futures in Kuala Lumpur fell for an eighth day today, poised for the worst run since 2006.
"China’s imports have been excessive, and we have yet to see a pickup in demand," said Chen Kai, an analyst at Shanghai Pansun Information & Technology Co, a Shanghai-based oilseed researcher. "Prices may continue to weaken."
Most-active crude palm futures traded at RM2,389 ringgit a tonne on the Malaysia Derivatives Exchange at 3:14pm in Kuala Lumpur, 27 per cent lower over the past year. Refined palm was at 6,608 yuan (US$1,062) a tonne on the Dalian Commodity Exchange, 20 per cent lower over 12 months.
The latest reserves estimate from state-owned Grain.gov.cn, a unit of the China National Grain & Oils Information Center, is 130,000 tonnes higher than a week ago and compares with 1.12 million tonnes on February 1. The year-ago figure was 870,000 tonnes.
Imports in December, when traders took earlier shipments to avoid stricter quarantine inspections implemented from January 1, surged to a record 954,087 tonnes, 46 per cent higher than November, according to customs data. January’s imports were 472,733 tonnes.
China’s imports from Malaysia slumped 15 per cent to 246,290 tonnes in February from a month earlier, according to data from surveyor Societe Generale de Surveillance yesterday. Total exports from Malaysia declined 8.8 per cent, the data show.
Global stockpiles will gain to a record 7.203 million tonnes this season, according to the US Department of Agriculture. Output in Malaysia will total 18.9 million tonnes in 2013, matching the biggest-ever crop in 2011, the Malaysian Palm Oil Board forecasts. Indonesia may harvest a record 30 million tonnes, Derom Bangun, chairman of that nation’s board, said on February 18.-- Bloomberg