Malaysia palm oil stockpile seen up

India plans tax cut on edible oils to check price hike

FE Team | Published: May 06, 2022 23:32:40

KUALA LUMPUR, May 6 (Agencies): Malaysia's palm oil inventories at the end of April likely rose for the first time in six months as production and imports climbed, a Reuters survey showed on Friday.
Stockpile was seen climbing 5.2 per cent from the previous month to 1.55 million tonnes, its highest since January, according to the median estimate of eight planters, traders and analysts polled by Reuters.
Output in the world's second-largest producer was pegged 4.9 per cent higher at a five-month peak of 1.48 million tonnes.
Exports likely fell 5.6 per cent to 1.2 million tonnes, while imports were seen nearly 12 per cent higher at 95,000 tonnes.
Meanwhile, cargo surveyors have estimated a steeper decline of between 13.6 per cent and 16 per cent in exports as key buyers China, India, and Europe slowed purchases amid soaring prices.
"Indonesia's policy will be extremely critical for the month of May," said Ronny Lau, a trader with Singapore-based commodities trading firm Four Bung.
Export demand for Malaysian palm oil is set to rise after top producer Indonesia last month temporarily banned shipments in a bid to tame soaring cooking oil prices.
The policy will lead to increasing foreign demand switching over to Malaysia and Thailand, said Marcello Cultrera, an independent broker in Kuala Lumpur.
Meanwhile another report from New Delhi adds: War in Ukraine and Indonesia's ban on palm oil exports have caused edible oil prices to escalate sharply.
The Indian market too has seen an unprecedented rise in the prices of edible oils.
To keep the prices in check the Indian government plans to cut taxes on edible oils in India.
Sixty per cent of the edible oils in India are sourced from imports.
Hence any change in the supply chain is likely to escalate the prices of edible oils.
The prices, which have been rising for the past two years accelerated after Russia invaded Ukraine.
But the major factor in the price rise has been the export ban of Indonesian palm oil to protect its domestic market. Indonesia is one of the largest providers of edible oils.
India has tried to reduce prices in the past, including reducing import duties on palm, soybean oil and sunflower oil, and limiting inventory to prevent stocking the oil.