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Malaysia has an advantage in India thanks to Indonesia's palm oil flip-flops


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According to industry sources, Indonesia's "unpredictable" palm oil export policies may assist Malaysia emerge as the major supplier to India, the world's largest customer of the edible oil.


Indonesia is the world's largest producer of palm oil, but its inconsistent export policies, such as the most recent ban imposed on April 22, have driven Indian consumers to rely more on Malaysia, the world's second-largest producer with output less than half that of Indonesia.

 

Malaysia's Commodities Minister Zuraida Kamaruddin said on Tuesday that the country is preparing to take advantage of Indonesia's prohibition by slashing palm oil export tariffs in half.


According to the Solvent Extractors' Association of India (SEA), a vegetable oil trade body, the combination of lower export taxes and the Indonesian ban may result in Indonesia's share of palm oil exports to India falling to 35 percent in the current marketing year ending on October 31, from more than 75 percent a decade ago.

 

"The largest benefactor of Indonesia's unexpected policies is Malaysia," said SEA executive director BV Mehta.


"Because Indonesia isn't selling, Malaysia is selling more, and at near-record high prices."


According to SEA data, India purchased 1.47 million tonnes of Malaysian palm oil in the first five months of the 2021-22 marketing year, compared to 982,123 tonnes from Indonesia.

 

India imported roughly 570,000 tonnes of palm oil in May, according to trade estimates, with 290,000 tonnes coming from Malaysia and 240,000 from Indonesia.


If Indonesia's export restriction is extended for another two weeks, India's June palm oil imports, which are primarily from Malaysia, might drop to 350,000 tonnes.

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