The Indian government had privately urged importers of palm oil to stop importing the product from Malaysia which has resulted in a virtual halt in the import of Malaysian palm, claimed reports in India quoting industry and government sources. This decision followed a diplomatic row with Malaysia – one of the largest suppliers of palm oil in the world.
The diplomatic row started after the Malaysia’s Prime Minister criticised India’s actions in Kashmir and its new citizenship law, following which the Indian government issued the warning last week which also comes almost at the same time as a move by new Delhi to limit imports of refined palm oil and palmolein.
And according to latest reports quoting industry sources, crude or refined palm oil from Malaysia have stopped being purchased by Indian importers.
“Officially there is no ban on crude palm oil imports from Malaysia, but nobody’s buying due to government’s instructions,” said a report published by Reuters quoting a leading refiner. The report added that despite paying a premium to prices in Malaysia, importers are now buying palm oil from Indonesia.
With annual import of more than 9 million tonnes primarily from Indonesia and Malaysia, India is the largest importer of palm oil in the world.
Malaysia’s palm oil inventories could increase and there can be pressure on prices because of the near blockade of palm oil purchase from the country by India. Typically the global benchmark for palm oil prices is set on prices of the product in Malaysia.
This alleged decision by the Indian government could be beneficial for the largest exporter of crude palm oil (CPO) – Indonesia.
“We could import CPO from Malaysia, but the government has warned: ‘Don’t come to us if your shipments get stuck,” a Mumbai-based trader reportedly told a newspaper. The trader added that “no one wants to see their shipments get stuck at ports.”
According to data from Malaysian Palm Oil Board (MPOB), with a total import of 4.4 million tones, India was the largest importer of Malaysian palm oil in 2019.
The trader reportedly said that even if some buyers make small shipments to fulfill old orders, the imports from Malaysia for 2020 will not be more than 1 million tones.
Following the revelation of the news in the media, there was a drop of 1.4 per cent in Malaysian palm oil futures on Monday.
No remarks about Malaysian palm oil have been made by the Indian government in public. There were no comments from the Indian Commerce ministry on the reports as well. No comments were also available from Malaysia’s Primary Industries Minister Teresa Kok, who looks after the palm oil industry.
This unofficial trade standoff between India and Malaysia started after a speech by Malaysian Prime Minister Mahathir Mohamad in which he criticized some decisions of the the Indian government headed by Prime Minister Narendra Modi.
In October, Mahathir had said that India had “invaded and occupied” Kashmir – a territory that is claimed by both India and Pakistan but is majorly under Indian control. Mahathir again criticized the Indian government of stoking unrest with its new citizenship law.
(Adapted form LiveMint.com)