The influential analysis group termed as "limited" the potential for further losses in palm oil prices which, on Kuala Lumpur’s futures market, ended at a five month closing low of 2,920 ringgit a tonne on Tuesday, depressed by the broad sell-off of risk assets.
The analysis reflected "current strong world import demand" for palm oil, with orders up sharply in Europe, India, Pakistan and, notably, China, which earlier this month lifted price controls on cooking oils, curbs which had led toa run-down in inventories.
"China has reportedly been a strong buyer of palm oil in recent weeks and we are likely to see rising Chinese imports in August and September," Oil World said.
The comments come ahead of official data due on Wednesday from Malaysia, the second-ranked exporter, expected to show a 3% rise, month on month, to 1.63m tonnes in shipments.
‘Buying has picked up’
Oil World also forecast a rebound in Chinese imports of soybeans from major exporters Argentina, Brazil and the US, with the figure set to hit 6.65m tonnes this month, up some 1.0m tonnes from last month’s figure, and up more than 2.3m tonnes from June.
"There are now indications that Chinese buying has picked up," the German-based analysis group said.
"We consider it likely that the US will resume exporting soybeans to China in August."
The comments follow a series of orders by China of US soybeans, which have renewed hopes for trade after the US Department of Agriculture last month cut its forecast for China’s imports in 2011-12 by 1.5m tonnes to 56.5m tonnes.
"Demand by China’s soybean crushers [in 2010-11] has continued to stagnate," the USDA said last month, noting that price controls had left processors with "unprofitable margins".
"At the same time, the growth in soybean meal consumption has been too weak to counter the losses in oil processing.
"So soybean imports have slowed to avoid adding to surplus stocks at the country’s ports."
Rabobank two weeks ago reported that Chinese soybean crushers’ margins had turned positive.
Oil World’s report also came as Chicago’s November soybean contract fell on Tuesday to $12.82 a bushel, its lowest since March, depressed by the broader market liquidation.
The market recovery helped the lot rebound to $13.10 ¼ a bushel as of 16:40 GMT, down 0.1% on the day.