Malaysia will benefit from the reduction in palm oil exports from Indonesia

29-Oct-2024 06:24 PM

Jakarta. The production of palm oil in Indonesia is being affected due to the effect of last year's El Nino weather cycle, while its demand and consumption is increasing in the domestic sector for the production of biodiesel and food purposes.

As a result, less stock of palm oil is available for export purposes. Data from the top industry-trade body - Gapki shows that 23.80 lakh tonnes of palm oil products were exported from the country (Indonesia) in August, but in September it declined to 17.90 lakh tonnes, which was much less than the shipment of 22.80 lakh tonnes in September 2023.

By the way, the peak season of palm oil production is also ending there. According to the report of Gapki, during the first eight months of the current year i.e. January to August 2024, the production of palm oil in Indonesia declined to 345.20 lakh tonnes, which was 17.70 lakh tonnes less than the shipment of 362.90 lakh tonnes in the same months of the year 2023.

There is a possibility of reduction in production during the coming months (September-December) as well. B-35 program is currently in force in Indonesia, under which it is mandatory to use at least 35 percent palm oil in the manufacture of biodiesel.

There is a plan to take it to 40 percent next year, due to which the consumption of palm oil in its domestic division is expected to increase by 15-17 lakh tonnes to 160 lakh tonnes. This will affect the export performance.

Industry analysts say that if the export of palm oil from Indonesia decreases, then it will directly benefit Malaysia, which is the second largest producer and exporter of palm oil in the world after Indonesia.

India imports the most palm oil from these two countries. The price of palm oil has risen in recent months and is likely to remain strong going forward. Import duty on edible oils in India has been increased by 20 percent.