KUALA LUMPUR: China is bumping up its palm oil purchase from Malaysia by around 50% to around 4.7 million tonnes, which will be a huge boost to local planters and the government, which has been struggling with high stock piles.
The good news came when Malaysia entered into four agreements with Chinese parties for the export of 1.62 million tonnes of palm oil, worth a total of US$891mil (RM3.63bil) based on current prices.
The purchase intent documents were inked during the Malaysia-China Palm Oil Business Forum here yesterday, witnessed by Primary Industries Minister Teresa Kok and China’s Ambassador to Malaysia, Bai Tian.
Last year, Malaysia exported 3.07 million tonnes of palm oil and palm products, worth a total of RM8.38bil to China, an increase of 7.3% from 2.86 million tonnes worth about RM9.39bil in 2017.
Kok told reporters that the agreements were a “good start”, following the delegation meeting between the two countries in August last year, during which it was decided that the Chinese uptake of Malaysian palm oil would be increased by 500,000 tonnes.
She added that it was a notable achievement ahead of Prime Minister Tun Dr Mahathir Mohamad’s visit to China in April.
“We hope the numbers will increase as we go along, but this is a very good start.
“This will definitely reduce our CPO stockpile and I believe it will also have a very positive impact on palm oil prices,” she said after opening the forum here.
The price of CPO closed at RM2,149 yesterday, down by RM40.
The Chinese ambassador, meanwhile, noted that China was currently the third-largest buyer of Malaysian palm oil.
The agreements inked for the purchase of 1.62 million tonnes of palm oil, he said, were very significant, especially in view of the 45th anniversary of diplomatic ties between Malaysia and China this year.
“This is really a very big number and I believe in the near future, there is possibility that China will increase its uptake of palm oil from Malaysia,” he said.
He urged Chinese and Malaysian entrepreneurs to go further downstream in their cooperation in order to tap into the potential of palm oil-related products, including biodiesel.“The prospects of China as an export market for Malaysia are very bright.
“As I have said before, China imposes no glass ceiling on the import of Malaysian palm oil,” he added.
The export of Malaysian palm biodiesel to China, meanwhile, increased from 140 tonnes (RM0.5mil) in 2017 to 41,450 tonnes (RM113mil) in 2018.
During her speech earlier, Kok said the increased uptake from China could help offset the impact of the European Union’s plan to ban palm-based biodiesel on Malaysia and the country’s stockpiles.