Bengaluru/Mangaluru, April 25
Indonesia on Monday clarified that its export ban on palm oil, to come into force from April 28, will not cover crude palm oil, providing much relief to importing nations such as India that depend on imports of edible oils to meet their domestic demand.
Agencies reported that Indonesia government officials told palm oil companies that the ban would apply only to refined, bleached and deodourised (RBD) palmolein, though trade ministry officials in Jakarta failed to respond on requests for clarification.
In India, the report of Indonesia’s decision was greeted with relief by the industry terming it as “better senses prevailed”.
The Solvent Extractors Association of India (SEA) said it was yet to get any official information from the Indonesian government. BV Mehta, Executive Director, SEA, said the development is good for Indian edible oil industry.
“I think better senses prevailed in Indonesia also. Otherwise, the market would have been on a fire,” he said.
On Monday, the Malaysian Derivatives Exchange (MDEX) saw crude palm oil open higher by nearly seven per cent. Once the reality of the decision, announced by Indonesian President Joko Widodo on April 23 shocking the global market, sunk in, the commodity pared its gains to close two per cent lower at 6,222 Malaysian riniggit a tonne ($1,428.70/₹1.09 lakh).
The Indonesian decision had the industry and Centre on tenterhooks as already cooking oil prices have been surging continuously since last year. India’s wholesale price index inflation rose to a record 14.95 per cent in March.
Most of India’s inflation has been imported with the Russia-Ukraine war further compounding it. Cooking oil prices have been soaring on supply shortage globally due to lower soyabean production in South America and palm oil output in South-East Asia. Jakarta decision only stoked it further.
Flaring up of crude oil prices have also aided the surge in prices of cooking oils and foodgrains. The Indian government has also run out of options by reducing import duties to maximum possible limits and controlling the retail price fixed by processors.
The decision, in a way, hurt processors as import of refined oil had become more viable than importing crude oils. In the case of palm oil, the export tax imposed by Malaysia and Indonesia hurt the processors further. Of late, imports of RBD palmolein have been increasing due to these policy measures.
Mehta said refined palm oil export to India had touched over 30 per cent of total palm oil imports in the last five months, thereby reducing capacity utilization of Indian refiners.
India to gain
Indonesia curbs on exports of RBD palmolein could be a blessing in a disguise for Indian processors. India’s imports of palm oil have been changing in tune with the policies here and in South-East Asia, which prefer its refining units capacity to be utilised.
SEA data show that India imported 4.74 lakh tonnes (lt) of RBD palmolein from Indonesia during November-March of the current oil year to October against 4,900 tonnes in year-ago period. The import of CPO from Indonesia stood at 5.01 lt during November-March of the oil year 2021-22 against 12.95 lt in the year-ago period.
Mehta said India needs more CPO and not RBD palmolein. “India will be comfortable if CPO is allowed. That is the reason why the market which went up by 600 points in the morning is now hardly about 100 points up,” he said.
In case, India needs RBD palmolein, it can always import from Malaysia, he added.
In a representation to the government on April 21, SEA had stated that Indonesia has imposed export tax + levy of $575 a tonne on CPO, $408 a tonne on RBD palmolein and $386 a tonne for refined palm oil.
This had made palmolein cheaper than CPO by about 5 per cent at their current prices. SEA said Indonesia was incentivising exports of finished product (refined palmolein) at the cost of raw material (CPO).
Soyabean Processors Association of India Executive Director DN Pathak said: “We have heard that Indonesia has now excluded crude palm oil from the export ban. If that has happened, it is very good thing as in an already tight market, a ban on CPO would have tightened supplies further. However, we are awaiting more clarity.”
(with agency inputs)
April 25, 2022