INDIA’S palm oil demand is expected to pick up in upcoming months amid the current soft crude palm oil (CPO) prices and festive seasons approaching.
According to UOB Kay Hian Research, the country’s vegoil demand is already back to pre-COVID-19 levels with the operation of its hotel, restaurant and café (HORECA) segments returning to normal.
“With this, the market share of palm oil to India’s total vegoil imports is expected to increase,” projected analysts Leow Huey Chuen and Jacquelyn Yow in a regional plantation update following a meeting with Malaysia Palm Oil Council’s (MPOC) regional head (India and Sri Lanka) Bhavna Shah.
“If CPO prices continue to weaken, the Indian Government may revisit CPO imports duty. With inflation and the market environment, the Indian Government is also under pressure, hence there were frequent import duty changes in India and stocks control. We observe that the Indian Government has shifted its policy focus from consumers to farmers.”
In a related development, UOB Kay Hian Research does not deem as a threat the National Mission on Edible Oils – Oil Palm (NMEO-OP) which has been launched by the Indian Government with the aim to be more self-reliant on edible oils.
“This is an opportunity for Malaysia whereby Indian oil palm farmers need Malaysian oil palm seedlings and the know-how technical transfer to India,” justified the research house.
Towards this end, POC had signed a memorandum of understanding (MOU) with the Indian Vegetable oil Production Association (IVPA) which covers various areas of cooperation, including:
- Educating Indian consumers on the nutritional and healthy benefits of palm oil;
- Exchanging palm oils and fats-related business and technical knowledge through its research bodies; and
- Assisting India in sourcing technical know-how.
Reiterating its “market weight” outlook on the plantation sector, UOB Kay Hian Research expects CPO prices to likely stabilise at current range after falling 44% from its recent peak in June.
“We reckon that CPO prices would remain soft in the near term with more exports coming from Indonesia to curb its current high inventory,” opined the research house.
“Having said that, we think that CPO prices would still remain supported until year-end on the back of demand recovery and potentially weaker-than-expected production due to current high crops losses in Indonesia and Malaysia.”
UOB Kay Hian Research’s CPO price assumptions are RM5,200/metric tonne (MT) and RM4,000/MT for 2022-2023 respectively. – Aug 8, 2022.
