PETALING JAYA: India has started to buy Malaysian palm oil again after four months following a diplomatic row, with buying spurred by a fall in domestic inventories and discounted prices.
Reuters said the renewed purchases come amid improving trade ties between the two nations following the formation of the Perikatan Nasional government, with Malaysia signing a deal last week to buy a record 100,000 tonnes of Indian rice.
Leading Indian importers agreed last week to buy up to 200,000 tonnes of crude palm oil from Malaysia, the world’s No. 2 producer after Indonesia, to be shipped next month and in July, trade sources told Reuters.
“Port stocks have dropped sharply in India because of lower imports,” a Singapore-based trader who sells Malaysian and Indonesian palm oil said.
Ship-tracking data compiled by Refinitiv showed that India’s total palm oil imports for the first four months of this year fell by more than 50% to 1.11 million tonnes from the same period last year.
Reuters said a resumption of purchases by India, the world’s biggest edible oil importer, could further support Malaysian palm oil prices, which have edged up from 10-month lows in recent days.
It quoted an Indian edible oil refiner who contracted “a few vessels” for June shipment as saying the renewed buying has been spurred by low stocks, while India’s relations with Malaysia have been improving since the PN government was formed in early March.
“I think the Indian government will allow unloading of upcoming shipments. We can’t rely on one seller (Indonesia) indefinitely, especially when you have to build inventory,” the buyer said.
Malaysian palm oil is now available at a US$15 discount to supplies from Indonesia, which on Monday raised its palm oil export levy by US$5 per tonne, said a Mumbai-based dealer with a global trading firm.
Indian purchases of palm oil from Malaysia could rise further if discounts remain, he said.
Another Indian edible oil refiner said Malaysian buyers are eager to sell even at a discount as stocks are rising and production is expected to improve next month.
Malaysia’s palm oil inventories jumped to more than 2 million tonnes in April, well above expectations, as production surged to a six-month high and Covid-19 lockdowns led to a slump in demand.
India buys more than 9 million tonnes of palm oil a year, accounting for nearly two-thirds of its total edible oil imports, and took a record 4.4 million tonnes of Malaysian palm oil in 2019.
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