Malaysia which is the second-largest palm oil producer in the world is now emerging as the top source of India’s palm oil imports.
“Malaysia is the biggest beneficiary of Indonesia’s unpredictable policies,” said BV Mehta, executive director of SEA (Solvent Extractors Association of India). “As Indonesia is not in the market, Malaysia is selling more palm oil, and at near-record high prices.”
Indonesia is the world’s biggest palm oil producer but its volatile export policies, including the most recent ban announced on April 22, have pushed Indian consumers to increase their dependence on Malaysia, the world’s second-largest producer whose output is less than half of its rival.
Malaysia is positioning itself to take advantage of Indonesia’s ban by cutting palm oil export taxes by as much as half, Malaysia’s Commodities Minister Zuraida Kamaruddin said on Tuesday.
The combination of lower export taxes and the Indonesian ban may mean Indonesia’s share of palm oil exports to India will fall to 35 per cent in the current marketing year ending on October 31, from more than 75 per cent a decade ago, according to an estimate from the Solvent Extractors Association of India (SEA), a vegetable oil trade body.
In the first five months of the 2021-22 marketing year, India has bought 1.47 million tonnes of Malaysian palm oil compared with 982,123 from Indonesia, data compiled by SEA showed.
Trader estimates for May show India imported about 570,000 tonnes of palm oil, with 290,000 from Malaysia and 240,000 from Indonesia.
If Indonesia’s export ban stays in place for two more weeks, then India’s June palm oil imports could fall to 350,000 tonnes.