Cheaper Indonesian palm oil cuts Malaysia's exports to India

Cheaper Indonesian palm oil cuts Malaysia's exports to India

Agence France-Presse, Kuala Lumpur

Malaysian crude palm oil (CPO) exports to India have nearly halved since 2001 and are expected to dip further next year due to lower pricing by rival Indonesia, a report said on Tuesday.

CPO prices are hovering around 1,850 ringgit (US$487) a tone while Indonesian palm oil is shipping at a discount of more than 380 ringgit, the Business Times said.

"In 2001, India bought two million tones of Malaysia's palm oil. Now it has dipped to the 1.4 million-tone mark," Primary Industries Minister Lim Keng Yaik was quoted as saying.

"Unless Malaysia's CPO price is more competitive, we will continue to lose market share," he warned.

Lim said the drop was attributed to a shift in Indonesia's strategy from exporting mostly processed palm oil to exporting mostly crude palm oil. CPO now accounts for 90 percent of its exports of the commodity.

At the same time, India has also trimmed purchases of processed palm oil and increased uptake of CPO to bolster domestic refining activities, he said.

India, which accounts for some 15 percent of Malaysia's palm oil export, has been the biggest palm oil buyer for the past decade until it was overtaken by China which imported 1.8 million tones last year.

India's imports shrank to 1.6 million tones in 2002 from 2.38 million just three years ago.

Malaysia is the world's largest palm oil producer, accounting for about half of global output.

The Business Times quoted an analyst as saying that Malaysia need not be alarmed because increasing purchases from China and growing markets in countries such as Vietnam and Bangladesh would offset the drop in exports to India.