China’s palm oil imports may rise to a record as its discount to domestic soybean oil widens and as traders in the second-biggest buyer use the commodity as collateral for loans, a survey by Bloomberg shows.
Imports in the year through Sept. 30 may total 6.7 million metric tons and average 475,000 tons each month from June to September, according to the median of six estimates from China-based analysts and traders. Last year’s total was 5.8 million tons, customs data show.
As much as 75 percent of inbound shipments are done by traders who also use the cooking oil to obtain financing, according to state-owned researcher Grain.gov.cn. The discount of benchmark palm futures traded in Malaysia to soy futures in China has averaged $545 a ton since Oct. 1, compared to $484 over the preceding 12 months, according to data compiled by Bloomberg.
“The cash crunch that China’s in spurs buying to raise capital,” said Leon Xia, an analyst at Shanghai JC Intelligence Co. Xia said demand may also benefit through summer, when warmer weather makes it easier to mix palm with other cooking oils.
The contract for September delivery on Bursa Malaysia Derivatives rose 0.9 percent to at 2,375 ringgit ($749) a metric ton at 12:30 p.m. local time. Futures are in a bear market and have lost 21 percent in the last 12 months.
On China’s the Dalian Commodity Exchange, refined palm oil for January delivery rose 0.6 percent to 5,860 yuan ($954) a ton, while soybean oil gained 0.4 percent to 7,330 yuan.
Informal lending involving traders who use commodities and other goods as collateral flourishes in China because the nation’s small businesses have trouble getting bank loans, according to Citic Securities Co. Money-market rates touched the highest level last week since at least 2003 amid efforts by the government to wring speculative lending out of the financial system.
Palm imports that totaled 4.8 million tons in the eight months through May 31, compared with 4 million tons a year ago, boosted inventory in China to a record of 1.6 million tons that month, said Chen Kai, an analyst at Shanghai Pansun Cereals & Oils Development Co. Stocks declined to 1.28 million tons this week, he said.
Global stockpiles are rising the most since 1999, with U.S. Department of Agriculture data showing them poised to jump 21 percent to a record 9.5 million metric tons in 2013-2014.
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