India’s January palm oil imports from Malaysia could hit 9-year low, says report

Indian traders and refiners say they have stopped buying Malaysian palm oil following ‘informal’ instructions from New Delhi.

PETALING JAYA: India’s monthly palm oil imports from Malaysia are expected to fall to their lowest level in nearly nine years in January, amid reports that there are few takers for crude palm oil (CPO) or palmolein for February shipments.

Reuters quoted traders and refiners in Mumbai as saying they stopped buying palm oil from Malaysia following “informal” instructions from New Delhi.

It said that lower imports by India, the world’s biggest palm oil importer, could weigh on Malaysian prices that have corrected nearly a tenth after hitting a three-year peak in early January.

The report said New Delhi privately urged palm oil importers during the second week of January to boycott Malaysian products after the country’s prime minister criticised India’s actions in Kashmir and its new citizenship law.

Some traders had been hoping state-run trading firms could buy refined palm oil for the public distribution system by floating tenders, but this does not seem to have materialised, it said.

“No one is buying Malaysia’s crude palm oil (CPO) or palmolein for February shipments. There are no open tenders from state agencies yet,” Reuters quoted a Kuala Lumpur-based trader as saying.

According to the report, the traders and refiners forecast that India will import less than 70,000 tonnes of palm oil from Malaysia in January – the lowest since April 2011 and significantly lower than the 253,889 tonnes it imported in January 2019.

Imports next month could be negligible at less than 10,000 tonnes as almost every Indian buyer has switched to Indonesia, the traders and refiners said.

“Traders stopped buying from Malaysia after the government gave verbal instructions. This month’s shipments are from the contracts signed before the government instructions,” the report quoted a Mumbai-based dealer with a global trading firm as saying.

In 2019, India imported 4.4 million tonnes of palm oil from Malaysia, with average monthly imports of 367,459 tonnes, Malaysian Palm Oil Board (MPOB) data showed.

Indonesian sellers are charging a premium of about US$25 per tonne over CPO supplies from Malaysia, but “we have little choice but to buy”, an Indian refiner, which had shifted its entire buying to Indonesia, told Reuters.

India’s palm oil imports from Indonesia could be around 550,000 tonnes in January, said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil importer.

Indonesia is the world’s biggest producer of palm oil, followed by Malaysia.

“Even in coming months, Indian imports would be negligible from Malaysia, unless the Indian government changes its stance,” another importer based at Indore in the central state of Madhya Pradesh told Reuters.