MUMBAI: Indonesia’s “unpredictable” palm oil export policies may help Malaysia emerge as the dominant supplier to India, the world’s top buyer of the edible oil, industry sources said.
Indonesia is the world’s biggest palm oil producer but its erratic export policies, including the most recent ban announced on Apr 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 (May 10).
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 Oct. 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.
“Malaysia is the biggest beneficiary from Indonesia’s unpredictable policies,” said B.V. Mehta, executive director of Mumbai-based Solvent Extractors’ Association of India (SEA), a vegetable oil trade body.
“As Indonesia is not in the market, Malaysia is selling more, and at near-record high prices.”
In the first five months of the 2021/22 marketing year, India has bought 1.47 million tonnes of Malaysian palm oil compared to 982,123 from Indonesia, data compiled by SEA showed.
Trader estimates for May show India imported around 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, mostly from Malaysia.