Palm oil to lose out to soyoil in Chinese imports

by Agrimoney.com

Palm oil is to lose out to soyoil in China's import rosters – and the disadvantage would be even bigger were it not for the soaring popularity of instant noodles.

China's consumption of vegetable oils is to grow by 5.4% to 28.9m tonnes in 2011-12, driven by "the steady growth of disposable income for Chinese consumers" driven by economic growth, the US Department of Agriculture's Beijing bureau said.

And, indeed, there may be room for it keep expanding yet, given population growth and comparison with neighbouring Taiwanese, who consume some 27% more vegetable oil per capita than the Chinese.

"Even though China's oil consumption has grown rapidly in recent years, there is still significant growth potential before it reaches the level of a similar market like Taiwan," the bureau said in a report.

'Price spike impact'

However, as far as imports go, it is soyoil which will prove the most favoured purchase, with China boosting buy ins by more than 5% to 2.0m tonnes, notably from South America.

"Argentina is expected to resume its status as the largest soybean oil supplier to China, after China lifted an import ban from late 2010," the report said.

Palm oil imports will rise by 1.7% to 6.1m tonnes, less than half the pace of last season, leaving them still a touch below the 2008-09 record.

"A price spike in 2011 is expected to negatively impact palm oil import growth," the bureau said, noting official data showing that the wholesale price of palm oil was 3% lower than soyoil in January, compared with an average discount of 10%.

Instant noodle craze
At least palm oil can count on its popularity among food processors, which use it in anything from biscuits to chewing gum to butter spreads – and in China notably for instant noodles.

"Industry sources show that instant noodle production in 2010 surged to 6.9m tonnes, up 23% over the previous year," the briefing said, adding that such products used "large amounts" of palm oil.

"Ready-to-eat noodles are popular with migrant workers and some office workers due to their low cost and convenience.

"With more and more people travelling and eating outside of the home, demand for instant noodles is expected to continue rising in 2011 and beyond."

Unlike in soyoil, China does not produce any palm oil itself, relying mainly on shipments from Indonesia and Malaysia, making it the second-largest importer of the vegetable oil after India.

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