MUMBAI, Indonesia’s plan to limit palm oil exports that has driven prices to record highs is likely to make leading importer India shift to substitute soy and sunflower oils, potentially capping the market’s rally, industry officials and analysts said.
- Indian buyers could source more palm oil from Malaysia
- Malaysia may struggle to fill the Indonesia’s share
- Palm oil price rally makes soyoil, sunflower oil competitive
India can also increase its palm oil shipments from Indonesia’s rival supplier Malaysia, but it is unlikely to be able to meet the shortfall, the officials said.
Indonesia is drafting a plan to limit palm oil shipments to tame domestic cooking oil prices, a senior industry official said on Wednesday.
Typically Indonesia supplies 60% of India’s palm oil imports, while Malaysia fulfills around 40%, and palm oil accounts for two-thirds of India’s annual edible oil imports of 13 million to 15 million tonnes.Already, the palm oil rally has substantially reduced the price gap with palm oil and soft oils, making Indian buyers likely to shift towards soyoil and sunflower oil, Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consultancy firm, said.
A year ago the gap, between CPO and soyoil, often perceived to be of higher quality than palm oil, was more than $100 per tonne.
A shift in buying would take time to translate into deliveries.
India’s palm oil shipments for signed contracts are unlikely to be affected as many producers have operations in both Indonesia and Malaysia and they can change the country of origin for few shipments, Bajoria said.
Palm oil imports land in India three-to-four weeks after traders sign deals, but soyoil takes two months due to the longer voyage, a Mumbai-based dealer with a global trading firm said, asking not to be named because he is not authorised to speak to media.