Cargill estimates that China's palm oil demand in 2024 will drop 30% year-on-year.

A Cargill executive said that the demand for palm products in China will drop by 30% between 2024 and 2019. This is because high prices have made it less appealing than soyoil, while vegetable oil demand stagnates.

The benchmark palm oil price in Malaysia has risen over 30% this year, despite the fact that production in Indonesia's top producer is falling and there are positive sentiments about its plans to expand its biodiesel mandate.

Ryan Chen, director of Cargill Investments China Ltd, said at the Indonesian Palm Oil Conference on Friday that this is the first time in many years soybean oil has been so cheap in comparison to palm oil for an extended period in China. This is true both in the cash and futures markets.

Chen stated that cash refined soybean oil was about 1,000 yuan (139.92 dollars) cheaper per metric ton than refined, bleached and deodorized palm oil. This is in the major palm oil-consuming regions of South China.

He said that the Dalian Commodity Exchange's January contract for soybean oil is 1,000 yuan less expensive than palm oil.

If the price differential between palm oil and soybean oil continues, China's palm oil imports could fall by 45 percent from 2023 to 2.3 millions tons. Next year's imports will be projected to be 2.3 to 2.4million tons.

Due to the poor margins for processing in China, and export restrictions on fatty acids methyl esters (FAME), imports of palm products like refined palm stearin, palm oil mill effluent and palm fatty-acid distillate, which is used to make biodiesel are expected to fall.

According to Chen, palm oil's share in China's vegetable oils market will fall from 17.5% to 12.8% by 2024. Palm oil consumption is expected to drop below the levels of 2022, after Indonesia, which was the world's largest palm oil exporter banned overseas shipments.

(source: Reuters)