By Mei Mei Chu
KUALA LUMPUR (Reuters) – Buyers in China, the world’s second-largest palm oil importer, are “no longer big bulls” in the commodities markets as they face an economic slowdown while the country chases a zero-COVID policy, edible oil analyst Dorab Mistry said on Wednesday.
“China may not be the steam engine for world growth,” Mistry, director of Indian consumer goods company Godrej International, said at the Globoil conference in Dubai.
Strict lockdown measures to stem a COVID-19 outbreak in China’s commercial capital Shanghai have reverberated through the global economy and supply chains, with some factories being forced to close and delays increasing at ports.
Commodities consumption in the world’s most populous nation is likely to be softer this year, Mistry said.
Mistry maintained his forecast for Malaysia’s 2022 palm oil output, seeing it higher at 19 million tonnes, while Indonesia’s production is seen rising by at least 2 million tonnes.
He also maintained his price forecast for crude palm oil futures, pegging a decline to 5,000 ringgit ($1,140.90) a tonne by June and eventually to 4,000 ringgit ($912.72) by September.
Malaysia’s benchmark prices have scaled to all-time highs of 7,268 ringgit ($1,658.41) this year as Russia’s invasion of Ukraine disrupted sunflower oil shipments and Indonesia’s move to ban palm oil exports further tightened global supplies.
“Prices can fall sharply once the Indonesian ban is relaxed and after the Ukraine conflict is resolved, as interest rates rise, production picks up, stocks around the Black Sea are unfrozen,” Mistry said.
($1 = 4.3825 ringgit)
(Reporting by Mei Mei Chu; Editing by Kanupriya Kapoor)
