India slows palm buying, China on the sidelines

India halved its palm shipments this week after two months of frenzied buying, while top consumer China stayed on the sidelines as traders assess whether stocks need to be replenished after the Lunar New Year.

India, the second largest vegetable oil importer after China, struck deals to buy 20,000 tonnes of palm oil products at $535-$555 a tonne C&F (cost and freight), and shipments are expected to taper off for the rest of February.

The South Asian country usually buys 55,000 a week, which include a mix of crude palm oil and refined palm olein.

''India imported more than half-a-million tonnes in the last two months and now there is a price disparity between imported oils and domestic sources,'' said a top Indian dealer.

Even state-run trading companies slowed their purchases with MMTC Ltd and State Trading Corp of India Ltd.

issuing much smaller tenders for palm oil, which is produced mainly in Indonesia and Malaysia.

''Part of the slowdown in Indian imports is due to the incoming rapeseed crop and the fact that prices are not going move very wildly in the next few weeks,'' said a Malaysian trader with dealings in India.

Rapeseed output in India is initially estimated to be around 6 million tonnes in the current oil year starting in October, up 20 percent from the previous year, industry officials say.

''The increase is significant because the rapeseed hectarage has increased by more than 10 percent because farmers wanted to take advantage of the high oilseed prices last year,'' said B.V.

Mehta, executive director of the Solvent Extractor's Association of India.

Rapeseed oil prices have been mostly steady this week at 980 -1,050 rupees ($20-$20.11) per 15-kg tin as trading was light in Jaipur, the capital of the northern state of Rajasthan where most of the rapeseed is harvested, Indian dealers said.

India grows two oilseed crops, mainly soybean and groundnut in the winter season, and rapeseed and groundnut in the summer season.

CHINA WAITS FOR NEXT WEEK China was mostly unsighted in palm oil markets as traders needed to assess the drawdown in stocks after the Lunar New Year holidays last month.

But exporters in Malaysia and Indonesia said China would need more palm cargoes in the next few months as the vegetable oil is better for cooking in the summer season than soyoil.

February soyoil imports were likely to remain at January levels of about 400,000 tonnes, a plunge of 42 percent from December, according to an official survey released on Friday.

[ID:nPEK3006] ''There is interest in buying palm oil but the deals will start coming in next week when most of the trading companies are back in action after the long Chinese New Year holidays,'' said the head of palm oil trading at an international house in Malaysia.

One trade source said Chinese traders would usually buy more than 250,000 tonnes of refined palm olein per month from Malaysia, starting in March, with demand slowly edging up in February.

China bought around 155,690-170,680 tonnes of palm oil in January, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said last week.

Physical crude palm oil prices in Malaysia have risen roughly 5 percent to 1,870 -1,880 ringgit ($518-$521) per tonne for February delivery from last week on fars of tight supply and increased hedging on the uncertain crop outlook in South America, traders said.

Spot refined, bleached and deodorised palm olein, the most heavily traded physical product, inched up more than 2 percent to $570 per tonne from last week.

($1=3.612 Malaysian Ringgit) ($1=48.72 Indian Rupee)