Monday, October 3, 2022

Indonesia’s flip-flops give Malaysia an edge in top palm oil market

Industry sources said Indonesia’s “unpredictable” palm oil export policies could help Malaysia emerge as a major supplier to India, the world’s top buyer of edible oil.

Indonesia is the world’s largest producer of palm oil, but its uncertain export policies, including the most recent ban announced on 22 April, have prompted Indian consumers to increase their dependence on Malaysia, the world’s second largest producer, whose production Less than half of your opponent. ,

Malaysia’s Commodities Minister Juraida Kamaruddin said on Tuesday that Malaysia is in a position to take advantage of Indonesia’s ban by cutting palm oil export taxes by more than half.

According to one estimate, a combination of lower export taxes and Indonesian sanctions could mean that Indonesia’s share of palm oil exports to India will drop to 35 per cent in the current marketing year ending October 31, from 35 per cent a decade ago. was more than 75 per cent. Solvent Extractors Association of India (SEA), a vegetable oil trading body.

“Malaysia is the biggest beneficiary of Indonesia’s unpredictable policies,” said BV Mehta, executive director of Mumbai-based Solvent Extractors Association of India (SEA), a vegetable oil trading body.

“Since Indonesia is not in the market, Malaysia is selling more, and at record high prices.”

Data compiled by SEA shows that in the first five months of the 2021/22 marketing year, India bought 1.47 million tonnes of Malaysian palm oil from Indonesia compared to 982,123.

Trader estimates for May show that India imported around 570,000 tonnes of palm oil, with 290,000 from Malaysia and 240,000 from Indonesia.

If Indonesia’s export ban remains in place for two more weeks, India’s June palm oil imports could drop to 350,000 tonnes, mostly from Malaysia.

FILE - A worker shows the fruits of palm oil at Sim Darby Plantation on January 31, 2020 in Pulau Kerry, Malaysia.

FILE – A worker shows the fruits of palm oil at Sim Darby Plantation on January 31, 2020 in Pulau Kerry, Malaysia.

new normal?

The decline in Indian palm oil imports would perpetuate an established pattern of Indonesian dominance across South Asia.

However, Indian oil refiners feel they will have to protect their supply chain against policy changes following Indonesia’s intervention in the palm oil market from 2021 onwards.

A Mumbai-based refiner said, “You can’t just rely on Indonesia and run a business. Even though Indonesia offers you discounts on Malaysia, you still have to secure supplies from Malaysia to hedge against Indonesia’s unpredictable policies. Will be.”

“Refiners sell pre-finished goods and we can’t hold back just because raw materials are not available,” he said.

But, Malaysia’s relatively tight palm oil inventories remain a pressing concern, a permanent labor shortage that has reduced plantation yields.

“Malaysia has limited stock. Many growers in Malaysia are sold well nearby,” said an official at Malaysian Planter.

Malaysia produces about 40% of Indonesia’s output so it cannot completely replace Indonesian supply.

Nevertheless, Indian oil consumers are keen to increase Malaysian deals and reduce their dependence on Indonesia.

An Indian buyer, speaking on condition of anonymity, said: “Indonesia may lift the ban on exports this month, but there is no guarantee that it will not restrict exports again. Malaysia’s export policy is more stable.” And that’s what we want.”

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This article is republished from – Voa News – Read the – original article.

Nation World News Desk
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