KUALA LUMPUR, May 6: India is seen as having very little choice and could soon turn to Malaysia and start importing back, especially if the Covid-19 pandemic situation in Indonesia gets worse and the country goes into full lockdown as most of the countries are doing at the very moment.
“The country (India) could step up purchases in the coming months as shipments are reportedly easing up,” the Malaysian Palm Oil Council (MPOC) said in its second quarter outlook for palm oil in the South Asian countries.
However, the current lockdown conditions will be the determining factor as to whether the required import volumes can be achieved or continue to add to the current woes, it said.
In India, total imports of oils and fats are projected at 1.0 to 1.2 million metric tonnes (MT) on a monthly basis, in which palm oil’s share will be at 50%, it said.
MPOC said the Saurashtra Oil Mills Association, the largest organisation of groundnut oil millers, has also urged the Indian government to remove the restrictions on refined palm oil import to meet the huge shortfall in the domestic edible oil market owing to the lockdown.
“It added that the country could expect a spike in the domestic prices of edible oils in the coming month if there is no relaxation in the palm oil imports into the country,” it said.
Malaysia is currently going through a partial lockdown but the palm oil industry can continue to operate due to the importance of palm oil to the country’s economy. The plantation sector has been allowed to resume their operations alongside the refineries and cooking oil producers.
Nevertheless, the outlook said Malaysia cannot expect to achieve the same market share in the palm oil import basket under the current situation as compared with a 45% market share last year.
A reasonable expectation for Malaysian Palm Oil’s (MPO) share would be about 25%, which is closer to the share as in 2018, it indicated.
South Asian countries are important export destinations for Malaysian palm oil. At the end of 2019, MPO exports to this region registered an unprecedented record of 5.75 million MT, an increase of 36.3% from what had been achieved in 2018.
The feat was largely attributed to the significant increase in MPO exports to India which were recorded at 4.41 million MT due to an import duty advantage, accounting for almost 77% of the total MPO exports into this region.
The scenario has since changed for the first quarter of 2020 (Q1 2020). Data by the Malaysian Palm Oil Board (MPOB) shows that for the period of January-March 2020, MPO exports to this region have gone down by 957,994 MT or 66.9% as compared with the same period a year ago.
The staggering drop in MPO exports to India has contributed to the overall decline in the total exports into this region. Following a trade spat between India and Malaysia in 2019, a restriction has been imposed on the importation of refined palm oil into India. – Bernama