1. Commodity News

Indonesia to Resume Palm Oil Exports; India May Import More Soya Oil Than Palm Oil

In India the retail oil prices have been reduced by Rs 2 per kg approximately after Indonesia’s announcement regarding lifting of the palm oil export ban. India’s cooking oil prices may soften further as more imported supplies arrive in the ports.

Abhijeet Banerjee
Palm oil imports by India are expected to decrease to roughly 500,000 tonnes by May end.
Palm oil imports by India are expected to decrease to roughly 500,000 tonnes by May end.

Indonesia will lift its palm oil export ban from May 23 and the decision was taken in light of the Indonesian domestic cooking oil supply situation showing an improvement. The average price of (bulk) cooking oil before the export ban in April was 19,800 rupiah per litre and after the ban the average price has lately dropped to around 17,200 to 17,600 rupiah per litre. However, the prices are yet to reach the targeted 14,000 rupiah per litre price.

Roughly a month back Indonesia had stopped the shipments of crude palm oil and some of its derivative products to control rising prices of domestic cooking oil, rattling global vegetable oil markets. The country is the world's top palm oil exporter, followed by Malaysia. Most of the industry persons are cheering the news as the ban was imposed at a time when the global vegetable oil markets were struggling from the sunflower oil supply squeeze because of the Russia- Ukraine conflict. This move will surely be a stimulus for reviving the global palm oil industry.

In India the retail oil prices have been reduced by Rs 2 per kg approximately after Indonesia’s announcement regarding lifting of the palm oil export ban. India’s cooking oil prices may soften further as more imported supplies arrive in the ports. India is the largest importer of palm oil from the Southeast Asian country and sources say that a prolonged ban would have pushed the domestic prices by more than 100 percent in the longer run, resulting in an unstable cooking oil market. India imports about 8 million tonnes of palm oil annually, contributing 40% of the total domestic edible oil consumption.

Despite Indonesia's decision to lift its ban on overseas shipments it is less likely that India's export of palm oil in June will rise significantly. Actually, the rise in soy oil may be more as compared to palm because the recent upside rally in palm oil prices has made soy oil more attractive for the refiners. Soya oil is the closest economic substitute for palm oil. The premium of soya oil over palm oil has decreased to just $70 per ton of late. Crude palm oil in India is presently being offered at about $1,750 a ton, including cost, insurance and freight (CIF), for the June shipments, while crude soybean oil is available around $1,820 a ton. Palm oil was trading at a discount of more than $150 per ton to soy oil just one month back.

Palm oil imports by India are expected to decrease to roughly 500,000 tonnes by May end, when compared with the April 2022 imports of 572,508 tonnes. On the other hand India's soy oil imports in May are estimated to jump to 450,000 tonnes from 273,151 tonnes during the month of April. 

As palm oil imports resume from Indonesia, India may import India's palm oil imports could increase to approximately 550,000 tonnes in June. Soy oil imports in June are expected to roughly rise to 480,000 tonnes. The estimates are as per the vegetable oil dealers. Therefore when compared with the May import estimates, India’s soya oil imports in June is expected to increase at a faster rate than palm oil.

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