Malaysia overcomes Indonesia to become India’s top palm oil supplier

Malaysia has surpassed Indonesia to become the biggest crude palm oil (CPO) exporter to top consumer India in 2020/21, after Indonesia imposed heavy taxes on exports of the edible oil last year, industry officials told Reuters.

Malaysia’s palm oil exports to India surged 238% to 2.42 million tonnes in the first seven months of 2020/21 marketing year started on Nov. 1, according to data compiled by The Solvent Extractors’ Association of India (SEA), a trade body of Indian vegetable oil refiners and traders.

During the period, Indonesia’s palm oil shipments to India fell 32 per cent to 2 million tonnes.

It comes after Indonesia imposed higher levies on crude palm oil exports in December to raise funds for its ambitious palm-based biodiesel programme, aimed at maximising domestic use of the edible oil. Indonesia’s export levies have been at their highest level for five months in a row, according to trade officials. Indonesia’s Finance Minister has said its government would cut the ceiling rate for CPO levies to $175 per tonne from $255 a tonne, without providing a timeframe.

“Malaysian planters are benefiting from Indonesian export levy. They are gaining market share by offering palm oil at discount over Indonesian supplies,” said B.V. Mehta, executive director of the SEA.

Malaysia’s rising shipments to India, however, would soon be capped as Indonesia is set to trim export taxes. 

Top producer Indonesia charged duty and levies of $ 438 per tonne on palm oil shipments in June. By comparison, June export duty in rival Malaysia was only $ 90 a tonne.

Malaysian exporters offered discounts as big as $100 per tonne in May but are now offering a smaller $25 discount as Indonesia is set to reduce export levies, dealers said.

With the markets taking a sharp fall of over 25 per cent in the last 2 weeks, as well as discussions on reducing Indonesia oil levies taking place, the shift to Indonesia as India’s top importer is very much on the cards.

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