Thursday, 18 August, 2022
HomeWorldMalaysian palm oil exports to India seen hitting new record low

Malaysian palm oil exports to India seen hitting new record low

Malaysia exported just 10,806 tons of palm oil to India in March which is 97% lower than last year and the lowest monthly total since the year 2000.

Text Size:

Kuala Lumpur: Palm oil shipments from Malaysia to top customer India may plunge to a fresh record low in April as the virus lockdown and punitive import curbs cause demand to dry up.

Malaysia, the No. 2 producer, exported just 10,806 tons to the country in March, according to Malaysian Palm Oil Board data. That’s a whopping 97% slump from a year earlier and the lowest monthly total in board data going back to 2000.

Punitive tariffs, import curbs on refined palm oil, the depreciating rupee and the general slowdown in economic activity due to virus restrictions are all going to push Indian palm imports further down in April, according to Sathia Varqa, owner of Palm Oil Analytics in Singapore. “April could see a number lower than 10,000 tons for the first time,” he said.

While there’s still some edible oil demand, it isn’t for palm oil at the moment due to the tropical oil’s narrow discount to rival oils, Varqa said. “India is likely to rely more on soybean oil and sunflower oil in April,” he said.

Veteran industry analyst Dorab Mistry, a director at Godrej International, said on Friday that India’s edible oil purchases may contract by 1.5 million tons in 2020, led by lower palm oil and lauric oils. The industry must be prepared for “cruel” prices as it faces challenges similar to those faced by crude oil and OPEC, he said in an interview.

Still, demand may pick up from May onward as the recent slide in Malaysian palm oil prices attracts buying interest, according to Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based broker and consultant.

“Malaysian crude palm oil prices are now at a sizable discount over Indonesian offerings,” Bagani said. “If that price balance remained the same, we may see India resuming Malaysian palm oil imports in May and June.”

The pandemic scuppered the bullish run in benchmark futures in Kuala Lumpur, sending them into a bear market. The edible oil has tumbled about 35% so this year in the biggest annual drop since the 2008 financial crisis, and fell below 2,000 ringgit a ton on Tuesday for the first time since July. – Bloomberg

Also read: Palm oil market is becoming one of the fastest growing sectors for commercial drones


Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular