Indonesian Ban To Boost Edible Oils Prices

Indonesia's indefinite ban on crude palm oil exports, and an anticipated drop in Indian oilseeds output will drive up edible oils prices in the domestic markets, industry officials said on Wednesday.

The Indonesian ban will sharply reflect in Indian edible oil prices, said Parvez Kader, managing director, Liberty Oil Mills Ltd, a leading edible oils trading firm. Domestic edible oil prices will rise by at least Rs 1,000-1,500 a tonne in the coming days because of the ban, he added.

Indonesia had initially banned crude palm oil exports from January to March in an effort to boost supply and check rising prices after its currency's decline triggered an export spree. On Wednesday, the Indonesian government decided to indefinitely extend the ban because exporters were building up stocks while waiting for the ban to be lifted rather than selling palm oil on the local market.

 

Soy oil futures at the Chicago Board of Trade hit three-month highs on Tuesday due to shrinking vegetable oil supplies and an export ban by Indonesia.

The Indonesian factor will have a cascading effect on the Indian prices, said Navinbhai Shah, president, Bombay Oilseeds and Oil Exchange Ltd.

The domestic mustard crop will also be lower because of inclement weather," he added.

He said the summer mustard crop harvest would be 20 per cent lower than the last season due to excess humidity and moisture. The total mustard harvest in the last season was about 6.5 million tonne.

There are reports that there is a 30 per cent damage to the rapeseed crop also because of weather conditions, Kader said.

Shah added that both the factors put together will keep edible oil prices firm in the coming months.

Traders said palmolein in the domestic market was quoted at Rs 31,200 a tonne compared with Rs 30,500 10 days ago. Groundnut oil was quoted at Rs 36,200 per tonne, about the same as last week.

Industry officials said Malaysian palmolein prices were expected to rise sharply because it was the only major supplier of palmolein after the Indonesian ban. Now, all the major palmolein buyers -- Pakistan, India and China -- will be looking towards Malaysia, Kader said. (Reuters)

This will definitely fuel Malaysian prices.

Indian importers said they were currently importing palmolein from Malaysia at $630 FOB at Malaysian ports.

Trade officials and importers said that of the 1.2 million tonne of palm oil India imported in 1996-97 (November-October), about 3,50,000 tonne came from Indonesia and the rest from Malaysia.

They said Indian edible oil imports would rise to about 1.75 million tonne in 1997-98 because of growing demand and rising incomes.