KUALA LUMPUR, March 4 (Reuters) - China's palm oil stocks
most probably rose to a record 1.4 million tonnes in February as imports surged
late last year ahead of stricter quality regulations from Jan. 1, a Reuters
survey of five Chinese traders and analysts showed.
Record palm oil stocks in China may further depress
domestic prices ,
which are already down more than 8 percent this year, and help keep inflation
there under control.
"Stocks in China have been hovering near the
one-million-tonne mark for a prolonged period and increased buying before the
stricter regulation pushed inventory level to a record high," said Xu Jian
Fei, chief economist with Chinatex Grains & Oils Import & Export Ltd,
one of China's largest edible oil trading companies.
The world's No.2 consumer of palm oil imported 954,087
tonnes of the vegetable oil in December, customs data showed, almost double the
average 490,000 tonnes, as traders sought to avoid the new quality standard.
But it turned out to be business as usual after China's
quarantine authorities allowed discharge of the first two palm oil cargoes from
top exporter Malaysia in late January, easing previous worries that the new
standards may hamper shipments.
February's imports most likely declined 15 percent to
400,000 tonnes from January's 472,733 tonnes because of the week-long Lunar New
Year holiday and a shorter month, according to the survey conducted ahead and
during the Bursa Malaysia Palm Oil Conference, which runs from March 4 to 6.
Official data for February imports will be out in late
March. The country does not release official data on stocks level.
Despite record stocks that are likely to be 56 percent
higher than the 900,000 tonnes seen in February last year, respondents said
imports may gain further traction with the winter ending in the coming months.
"Palm oil demand will certainly benefit if the weather
turns warmer in coming months," said Chinatex's Xu. Palm oil consumption
is typically lower in winter as the tropical oil tends to solidify in cold
weather.
Import demand may also be supported by trading companies
that use palm oil orders as a short-term financing channel to obtain cash from
banks.
"Imports will keep on growing because palm oil
consumption is expected to increase as the weather turns warmer and
trade-financing companies need to import palm oil to keep their cash flow
going," said a poll respondent.
FACTORS TO WATCH:
Stronger palm oil purchases from China may lead to better
Malaysian export numbers in March. In February, exports from Malaysia declined
about 9 percent, cargo surveyors' data showed.
MARKET REACTION:
The palm oil market may gain some support in March if China
snaps up more cargoes, benefit ting from prices that fell below 2,500 ringgit
($806). Prices fell more than 6 percent in February, impacted by high palm oil
stocks and improvements in South American weather that could increase soybean
crop supply.
