Agri Business

Importers shun Malaysian palm oil

Rutam Vora Ahmedabad | Updated on October 15, 2019 Published on October 15, 2019

Move not to impact Indian market; refiners turn to Indonesia, but festive demand remains lacklustre

 

There is not going to be any immediate impact on edible oil supplies even as the importers temporarily suspend buying Malaysian palm oil amid growing uncertainty on possible action by India on trade with Malaysia, experts noted. Importers stopped buying from Malaysia fearing India’s action against Malaysia after it criticised India’s decision to abrogate Article 370 in Jammu & Kashmir at the United Nations.

Trade sources revealed that India’s dependence on palm oil from Malaysia fell sharply after the Government imposed a 5 per cent safeguard duty on RBD Palmolein/Palm Oil of Malaysian origin last month. As a result, imports for November and December turned towards Indonesia.

“Earlier Indonesian palm oil had a majority share — about 70 per cent — in overall palm oil imports, while Malaysian imports had a 30 per cent share. But due to a duty difference benefit in favour of Malaysia, its share went up to 50 per cent. However, after the recent safeguard duty, there is no incentive to import from Malaysia any more,” Govindbhai Patel, a veteran edible oil expert told Businessline.

He stated that due to this reason, the latest uncertainty around India’s possible action against Malaysia will not affect overall edible oil supplies or availability in the country.

“Currently, the buyers are resistant to Malaysian oil as long as there is no clarity on government policy with Malaysia. They fear taking any risk,” Patel added.

However, the edible oils market in India is currently subdued with thin buying despite festive season progressing ahead towards Diwali.

Trade sources see no parity for imported edible oils at present due to weak demand. Processing units and refiners have thin off-take. “For the past 15 days, there has been negligible buying at 20 per cent of what is usually seen around this period. People aren't creating fresh inventory. They are trying to liquidate existing stocks,” stated a source.

In its monthly vegetable oil import update, the Solvent Extractors’ Association of India (SEA) noted that imports fell by 13 per cent to 13.03 lakh tonnes in September from the same month last year, due to large carry-over stock and imposition of safeguard duty on palm oil originating from Malaysia. “Although the import of RBD Palmolein remained more or less the same in September, the quantity of import from Malaysia reduced to 1/3rd from the previous month's import,” noted BV Mehta, SEA Executive Director.

However the overall import of vegetable oils in November 2018 to September 2019 stood at 14.17 lakh tonnes compared to 13.77 lakh tonnes during the previous comparable period, rising 3 per cent.

Published on October 15, 2019
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