KUALA LUMPUR: Indian importers will return to the Malaysian market in full strength by mid-January next year because of the anticipated lower production in the next quarter, says a palm oil industry expert.
M.R. Chandran said Indian importers would still be in need of palm oil for its unique functional and technical qualities, as well as to meet their growing demand and sustain their inventory levels.
“Of course, at the current futures prices crude palm oil (CPO) is nearly on par with soybean oil (SBO), whereas traditionally CPO sells at a discount of US$100+ (RM413) per tonne. Naturally, Indian importers will switch to SBO and sunflower oil (SFO).
“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,” he told Bernama.
Chandran said the Indian High Commissioner to Malaysia reiterated a few days ago that there is no directive from the Indian government to boycott Malaysian palm oil.
“India will not stop buying palm oil from Malaysia because their local edible oilseed production is short of target.
“The country (India) would 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, as the logistics and financial service facilities are far superior to Indonesia, Indian traders and brokers will continue to purchase from Malaysian suppliers, he added.
Meanwhile, United Plantations Bhd chief executive officer Datuk Carl Bek-Nielsen said the recent rally has seen palm oil prices rise very steeply and this could temporarily hamper demand.
“While India is the largest importer of palm oil today, the market is also very 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 added.
Bek-Nielsen said this, combined with the versatility and health attributes of palm oil, will 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. — Bernama
