Business Standard

Indonesia may strive to corner 60% of India's palm oil markets: Official

Global palm Oil prices seen stabilizing around $1000-$1100 per tonne due to low pdtn

Fadhil Hasan, Head of Trade and Promotion Division of the Indonesian Palm Oil Association (GAPKI)

Fadhil Hasan, Head of Trade and Promotion Division of the Indonesian Palm Oil Association (GAPKI)

Sanjeeb Mukherjee New Delhi
Indonesia will strive to corner at least 60 per cent share of the Indian palm oil markets which in recent times have slipped to around 47 per cent with Malaysia occupying the rest, a senior official from its largest palm trade association said.

“Trade relations with India did get impacted due to the sudden ban on exports imposed in our country in April but I think we now have a better policy and exports will be back to normal. India is one of the largest buyers of Indonesian palm oil and we believe that our market share will come back to levels enjoyed earlier sooner than later,” Fadhil Hasan, Head of Trade and Promotion Division of the Indonesian Palm Oil Association (GAPKI) told Business Standard.

Hasan was in Agra to attend the annual Globoil Conference, which is a congregation of leading players from the domestic and global edible oil trade and industry. 

India imports around 13-13.5 million tonnes of edible oils every year, of which around 8-8.5 million tonnes (around 63 per cent) is palm oil.

Of this, 8-8.5 million tonnes of palm oil, almost 45-47 per cent in recent times came from Indonesia and the remaining from neighboring Malaysia.

Hasan said that the flip-flop in first banning the exports and then lifting it first partially and then fully did have an impact on the healthy trade relations between the two nations, but things are now coming back to normal.

“Going forward, we (Indonesia) can guarantee that such policy flip flops that happened in April and May won’t happen again,” Hasan said.

Indian edible oil markets were plunged into a tizzy in April when Indonesia, which is a big supplier of palm oil into the country, suddenly banned exports to control its domestic prices.

There was a fear that the monthly supplies of around 300,000-325,000 tonnes of palm oil would suddenly stop in India sharply escalating the already high domestic prices. 

Few months later, Indonesia suddenly lifted the ban, first partially and then totally. In between, there were coflicting signals as to whether the ban would get revoked or not.

However, since then, things have changed a lot and global edible oil markets have softened due to falling demand and Indonesia too not only lifted the export ban but is now staring at high pipeline stocks.

This is threatening to pull down global palm oil prices sharply in the coming months, but Hasan believes that the drop might not be very severe as domestic production in Indonesia will be lower than last year.

“Look in the 2021 calendar year, Indonesia produced around 46.9 million tonnes of crude palm oil which will go down to 45 million tonnes this year because of less area expansion and productivity decline. Palm oil production in neighbouring Malaysia too will be lower than last year. Both these factors will keep the markets supported and though there might be minor swings in between but prices will remain supported,” Hasan said.

He said that as per his estimate crude palm oil prices will move up to $1000-$1100 per tonne and stabilize there as supplies are not expected to go up strongly.

On India's domestic Oil Palm Mission that has targeted to produce 2.8-3.0 million tonnes of palm oil locally by 2025-30, Hasan said that the Mission is noteworthy but benefits should not exceed the cost because the cost of producing palm oil in India will be much higher than Indonesia or Malaysia.

“We would also like the Indian government to keep the tariffs at their current levels of zero and would also work without the government to ensure that the zero export levy continues even after October so that trade between the two countries is facilitated,” Hasan said.

Meanwhile, in a related development, palm oil producers’ associations from India, Bangladesh, Nepal, Pakistan and Sri Lanka formed the Asian Palm Oil Alliance (APOA) today to work across the world to ensure that palm oil is recognized as a high-quality, economical and healthy vegetable oil and to change the negative perception about palm oil.

Together the Asian markets account for almost 40 per cent of the global palm oil demand, with India being the largest importer of palm oil in the Asian region.

The world annually consumes around 240 million tonnes of edible oils, of which almost 80 million tonnes (34 per cent) is palm oil. Of this almost 50 million tonnes comes from Indonesia and around 20 million tonnes from neighbouring Malaysia. 

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First Published: Sep 23 2022 | 12:04 AM IST

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