InfoSAWIT, JAKARTA - In a recent presentation, Ryan Chen from Cargill Investments (China) Limited discussed how changes in global supply and demand, particularly concerning soybeans and other vegetable oils, significantly impact the palm oil industry in China, the world's most populous country.

Chen began by explaining that China is experiencing a deficit in both grain oils and vegetable oils. "Changes in global supply and demand for soybeans, grain oils, and palm oil have a significant impact on the palm oil industry in China," he stated at the international palm oil seminar in early November 2024.

Soybean production in G3 countries is projected to increase by 25.6 million tons in 2024, equivalent to 4.9 million tons of soybean oil. Meanwhile, Indonesia's palm oil production growth is expected to be less than 1 million tons. With the existing export duties and levies, higher prices will also lead to increased duties and levies.

It has been noted that the price of refined soybean oil remains lower than the price of RBD olein in Southern China, a major olein consumer region. Additionally, soybean oil futures on the Dalian Commodity Exchange (DCE) are often lower than olein futures, widening the gap in the POBO (Palm Oil vs. Bean Oil) spread.

Despite a strong recovery in 2023, vegetable oil demand in China is expected to stagnate in 2024. "Total vegetable oil demand remains below the levels of 2020 and 2021," Chen remarked.

Demand for palm oil, both olein and stearin, is projected to decline by nearly 30% year-on-year due to the high POBO spread. "The share of palm oil in total vegetable oil demand is expected to drop to 12.8% in 2024, down from 17.5% in 2023," he added. (T2)

For more detailed insights, refer to the January 2025 edition of InfoSAWIT.