India, the world’s largest importer of vegetable oils, buys nearly 15 million tonne annually. Of this, palm oil
comprises 9 million tonne and the rest 6 million tonne soybean and sunflower oil.
Indonesia and Malaysia are the two countries which supply palm oil.
Malaysia produces 19 million tonne of palm oil in a year, while Indonesia produces 43 million tonne, the trade data showed.
The move comes against the backdrop of remarks by Malaysia on the new citizenship law and Kashmir issue.
On December 20 last year, Malaysian Prime Minister Mahathir bin Mohamad had reportedly said, “I am sorry to see that India, which claims to be a secular state, is now taking action to deprive some Muslims of their citizenship”.
“If we do that here, you know what will happen. There will be chaos, there will be instability and everyone will suffer,” he had said.
Earlier, Mahathir had said in the UN General Assembly that India had “invaded and occupied” Kashmir.
Further, according to industry sources, the government has advised importers not to buy palm oil from Malaysia. “We import 30 per cent of the palm oils from Malaysia, while 70 per cent from Indonesia. Our refiners can import from Indonesia which produces much higher than Malaysia,” a person in the know said.
There would not be any extra cost to import from Indonesia as the product and price is same, the source added. The Solvant Extractors’ Association issued a statement regarding the import restriction, saying: “This decision will go a long way in supporting the domestic refining industry by value addition within the country, employment generation, and improved capacity utilisation of the domestic refining industry, and will also greatly help the farmers for receiving remunerative price for their produce.”
Meanwhile, Malaysian palm oil futures ended lower on Wednesday, weighed down by fears of lower imports from India and Iran’s attack on US-led forces in Iraq, but fears of a shortfall in supply limited losses. The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed down 0.13 per cent, at 3,038 ringgit ($740.98). Palm oil had fallen three out of four sessions this week, and had ticked up 0.2 per cent in the previous session.
December production and stockpiles in Malaysia fell 8.5 per cent from November to its lowest in 27 months due to dry weather and lower fertiliser usage, a Reuters survey showed on Sunday.