India's edible oil industry welcomes RI CPO ban lift

India's edible oil industry welcomes RI CPO ban lift

JAIPUR, India (Reuters): India's edible oil industry on
Saturday welcomed Indonesia's decision to lift a ban on crude
palm oil exports because it would mean lower prices but they said
the cheaper imports would not last long.

"I expect Malaysian prices to come down by at least US$20 to
$30 a ton immediately after the ban is lifted," Govindlal Patel,
chairman of the Central Organization for Oil Industry and Trade
(COOIT), told Reuters. "But it will be a short-term phenomenon."

"Addition of a new source to the global supplies is a very big
factor. Certainly, it will ease the situation," said K.M.L.
Chabbra, COOIT executive director. who is attending a two-day
oil seeds seminar to forecast the summer oil seeds output.

Indonesia said on Thursday it would lift the export ban on
crude palm oil by April 22 and replace it with an export tax of
not more than 40 percent.

Indonesia had banned crude palm oil exports in January to
stabilize domestic prices which have been soaring because of the
tumbling rupiah currency.

The ban has pushed up Malaysian palm oil prices because it is
the only global palm olein oil supplier after Indonesia.

Malaysian palm olein oil is currently quoted at $700 per ton
(C & F) at Indian ports.

Indonesia has also said the export tax would be reviewed
regularly for possible reduction based on market prices and the
exchange rate, and cut to 10 percent by the end of December 1999.

Indian trade officials said the 40 percent duty imposed by
Indonesia would not be a disincentive to Indonesian exporters
because they would be able to export at a lower price since their
stocks had accumulated after the ban.

"With stocks having piled up, Indonesian traders might reduce
their prices and export," Patel said.

But industry officials said global edible oil prices would
remain supported for at least six months as Malaysian palm oil
output was expected to fall in 1998.

Argentina's sunflower oil output was also expected to be less
because of poor weather.

"With demand growing by about 3 percent annually, a shortfall
in international production will keep upward pressure on prices,"
Patel said.

Siva Ram Prasad, chairman of the All India Cotton Seed
Crushers' Association said: "We are hearing reports the Malaysian
crop will be less. If that happens, the pressure on prices will
remain for a very long time. India will definitely be affected."

Indian domestic edible oil prices have risen about 22 percent
since the Indonesian ban. Traders expect palm olein oil prices to
ease at least 1,000 rupees ($25.30) a ton in the coming week from
32,200 at present.

India imported about 1.7 million tons of edible oil in the
1996/97 (November-October) season, out of which nearly 1.2
million tons came from Malaysia and 400,000 tons from Indonesia.

Trade officials said India's edible oil demand was constantly
growing but high prices in the current season would reduce
consumption and as a result, imports would fall.

"Keeping in view the trend over the past few years, import
demand in the current oil season would have risen to 2.3 million
tons. "But high prices will cut imports to a large extent," Patel
said.

Trade officials said high Malaysian palm olein prices was
forcing some Indian importers to try sunflower oil from Brazil
and Argentina.

"We have contracted to import about 20,000 tons of sunflower
oil from Argentina in the past few days," Patel said.