India’s import curbs big blow to Malaysian palm oil
India, the world’s largest buyer of edible oils, last week restricted imports of refined palm oil and effectively halted all palm oil purchases from Malaysia in retaliation over the Prime Minister Mahathir Mohamad’s comments on Kashmir and citizenship law.
Malaysia palm oil exports to top destinations
India has been Malaysia’s top import market since 2014, according to industry data.
Last year, India bought 4.4 million tonnes of palm oil from Malaysia, accounting for 24% of all Malaysian palm oil exports.
The second biggest buyer of Malaysian palm oil, China, bought just 2.4 million tonnes last year, while the third largest buyer was Pakistan with 1.08 million tonnes, according to data from the Malaysian Palm Oil Council.
Malaysia vs Indonesia palm oil exports to India
Malaysia is talking to the Indian government and trade officials in a bid to resolve concerns over New Delhi’s import restrictions, Teresa Kok, Malaysia’s minister in charge of palm oil, said on Thursday.
She has flagged Africa and central Asia as emerging markets for Malaysian palm oil, and said Malaysia will continue efforts to increase share in the Middle East.
Read also: Malaysia bets on diplomacy, not retaliation, to tackle India palm curbs
India imports of palm oil from Malaysia vs Indonesia
But replacing India and getting other countries to buy Malaysian palm oil may not be easy.
Indonesia, the world’s biggest producer of palm oil, boasts lower production costs and has a bigger share of the market in many palm oil-consuming countries. It has also historically offered palm oil at cheaper prices than Malaysia, although recently Malaysian export prices have slumped below Indonesian rates as Indian buyers retreated from the market.
Malaysian palm oil prices slump to steep discount vs Indonesia amid Indian trade sphere
Leading industry analyst James Fry said India’s restrictions will shift Indian crude palm oil purchases from Malaysia to Indonesia, and Malaysia may end up selling more refined palm oil globally.
On Wednesday, Reuters reported that India was planning to widen curbs on Malaysia beyond palm oil, a move that could further hurt Malaysian revenue.
India is the seventh biggest market for all Malaysian exports, while Malaysia is India’s 17th largest export market.