July 29, 2022 — India plans to acquire nearly five million metric tons of palm oil from Malaysia until the end of the year. This is a 20% increase from the first six months of 2022, when palm oil prices soared and marked record highs. Now cheaper oil is expected to flood Asian markets as inventories are full to the brim.
Indonesia’s short-lived ban on palm oil exports has had lasting effects on stocks as the country now struggles to reduce its reserves while preventing prices from falling too steeply.
Indonesia has so many reserves that it is implementing a mandatory 35% palm oil blend for its biodiesel, up from the current 30% blend.
While Indonesia banned exports, Malaysia tried to gain market share in the palm oil market by reducing taxes on its exports and increasing production. The country is reaping the benefits of being a stable and reliable trading partner.
“The supply chain has been very well maintained and Malaysia has played a crucial role in securing edible oil for Indian demand over the past two months,” said Sudhakar Desai, President of the Indian Association of vegetable oil producers (IVPA).
“Currently, India’s palm oil imports stand at around eight million tonnes and we expect Malaysia’s market share to continue at 55%,” he notes.
Protocol of agreement
India’s IVPA has signed an agreement with the Malaysian Palm Oil Council to improve cooperation between the two bodies, with the aim of consolidating better demand and export performance.
The agreement will enable the exchange of information regarding sustainability efforts, as well as the exchange of data and collaboration in palm oil research and development, according to the signatory parties.
Desai thanked Malaysia for maintaining a reliable palm oil policy and responding to India’s demands during the difficult month when Indonesia banned palm oil exports.
China increases its stocks
With palm oil prices easing, China is stepping up its buying efforts. The country bought 96,495 metric tons of the product in June, compared to 85,123 metric tons in May, according to the Malaysian Palm Oil Board.
China is also committed to increasing its supply from Indonesia.
“Thank you very much for China’s commitment to add its import volume of crude palm oil from Indonesia. This will help us improve the welfare of approximately 16 million local palm oil producers. palm here in Indonesia,” said Luhut Pandjaitain, Indonesian Minister of Maritime Affairs and Investment.
“We hope China can continue to help Indonesia by increasing our palm oil trade,” he continued.
By Marc Cervera
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