WITH Indonesia lifting its palm oil export ban, Putrajaya said the decision would not impact Malaysia’s palm oil exports that much.
“I urge local palm oil growers, both plantation firms and smallholders, to not be unduly concerned with the recent development.
“While a knee jerk correction in palm oil price is inevitable as the move will ease concerns over vegetable oil supply, the Government does not expect a big downward adjustment to crude palm oil (CPO) prices as the market was aware the ban is temporary,” Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin said, in a statement.
On May 19, Indonesian President Joko Widodo announced he would lift the ban on palm oil exports on May 23 to relieve pressure on the global vegetable oil market after prices spiked due to the suspension and the war in Ukraine.
In April, he issued the ban following shortage of palm oil in the domestic market.
“Based on the supply … of cooking oil and considering there are 17 million people in the palm oil industry — farmers and other supporting workers — I decided that cooking oil exports will reopen on Monday, May 23.
“The government will still be monitoring everything strictly to ensure the demand will be met with affordable prices,” AFP reported him as saying.
Touching on the matter, Zuraida said despite Indonesia lifting its ban, analysts have projected that Malaysian players would benefit the most as they managed to sell their CPO at high spot prices, which translates into higher profit margin in 2Q 2022, coupled with higher production year-on-year (y-o-y) and quarter-on-quarter (q-o-q).
“Indonesia missed out on the high CPO price period (February-April 2022) when their palm oil was trading at a larger discount to Malaysia with all the export control policies put in place since late-January 2022,” she mentioned.
India buying M’sia CPO the most
Zuraida added that Indonesia’s earlier decision resulted in Malaysia, the second largest palm oil producer, to emerge as a dominant supplier to India, the world’s top buyer of the edible oil.
She also noted the combination of Malaysia’s lower export taxes and Indonesia’s earlier ban may mean the latter’s share of palm oil exports to India to fall by 35% in the current marketing year ending Oct 31, from more than 75% a decade ago.
“The estimate is given by the Solvent Extractors’ Association of India (SEA), a vegetable oil trade body.
“In the first five months of the 2021/22 marketing year, India bought 1.47 million tonnes of Malaysian palm oil compared to 982,123 tonnes from Indonesia, data compiled by SEA showed.
“Traders estimate for May show India imported around 570,000 tonnes of palm oil with 290,000 from Malaysia and 240,000 from Indonesia,” the Ampang MP quipped.
Zuraida remarked: “Given that the medium- to long-term outlook of the Malaysian palm oil industry remains bright, the ministry urges all Malaysian oil palm growers to join hands in helping to make the ‘Malaysian Palm Oil Full of Goodness’ campaign a success, as we seek to counter various misinformation with regards to palm oil.” – May 22, 2022
