Indian palm oil importers set to return in ‘full strength’

A palm oil industry expert says Indian importers will be back in mid-January.

KUALA LUMPUR: Indian importers will return to the Malaysian market in full strength by mid-January because of the anticipated lower palm oil production in the next quarter, an industry expert said.

MR Chandran said Indian importers would continue to depend on palm oil for its unique functional and technical qualities, as well as to meet their growing demand and sustain their inventory levels.

“At the current futures prices, crude palm oil (CPO) is nearly on par with soybean oil, whereas traditionally, CPO sells at a discount of US$100+ per tonne,” he told Bernama.

“Naturally, Indian importers will switch to soybean oil and sunflower oil (but) this is a short-term concern. It is normal during the winter season for India, China and Europe to cut back on imports of tropical oils for food. The preference is for soft oils like soybean and sunflower.”

Chandran said the Indian high commissioner to Malaysia had reiterated a few days ago that there was no directive from New Delhi to boycott Malaysian palm oil.

“India will not stop buying palm oil from Malaysia because their local edible oilseed production is short of target.

“India will continue to be a top export destination for Malaysian palm oil because there is a trade agreement between the two countries which will reduce the tariff rate for refined palm oil to 37.5% in 2020,” he said.

In addition, he said, Indian traders and brokers would continue to purchase from Malaysian suppliers because the logistics and financial service facilities available were far superior to those in Indonesia,

Meanwhile, United Plantations Bhd chief executive officer Carl Bek-Nielsen said the recent steep rise in palm oil prices could temporarily hamper demand.

“While India is the largest importer of palm oil today, the market is also price-sensitive or, put differently, demand is price-elastic.

“However, I foresee that the world is now experiencing a serious setback in production, and with that, supplies of palm oil,” he said.

He said this, combined with the versatility and health attributes of palm oil, would sooner rather than later result in India renewing its imports as the supply gap cannot be properly overcome by rape, sun or soybean oil.

“So I am optimistic,” he said. - FMT