MARKET DEVELOPMENT
30-01-2002
Soyabean ruling set to boost CPO exports to India
Kuala Lumpur, 29 January, 2002 - MALAYSIA’S crude palm oil (CPO) exportsto India are set to gain up to 500,000 tonnes in view of a possible moveby the latter to restrict imports of soyabean oil.Traders said under the tariff-rate quota (TRQ) ruling, Indian importersmay opt to buy either Malaysia’s or Indonesia’s palm oil to offsetsoyabean imports that will be affected by the ruling.“However, that chunk may also go to Malaysia’s rival Indonesia but due toIndia’s preference on refined oil, Malaysia will have the upperhand,†atrader told Business Times in Kuala Lumpur yesterday.“Coupled with fantastic exports to China in view of the Lunar New Year,CPO prices are not expected to dip below the RM1,200 a tonne level,†saidthe trader.Last week, Reuters had reported that New Delhi was considering imposingduties of 75 per cent, up from the current 45 per cent, on soyabeanimports in excess of 500,000 tonnes.The proposal is set to be announced officially by its Finance Ministryduring the Indian Budget slated on February 28.The subcontinent last year imported 1.5 million tonnes of both soyabeanand soyabean oil from countries such as Argentina and Brazil.India, Malaysia’s biggest CPO buyer, currently slaps a 65 per cent duty onMalaysia’s CPO after reducing it from 75 per cent in November last year.Under the TRQ, a particular quantity of edible oil can be imported on aparticular tariff with another set of tariff rates for the subsequentamount.Under the plan, India will slap a 45 per cent duty on the first 500,000tonnes of soyabean oil bought from outside followed by a 75 per cent dutyfor the following amount.The TRQ is not new because India had enforced a similar ruling forsunflower seed and rapeseed, whose exports were restricted to 150,000tonnes each year.China, Malaysia’s third biggest buyer of palm oil last year, alsopractises the TRQ system.The reasons behind the ruling is not clear but traders said it isobviously a move made by the subcontinent to boost its domestic edible oilsector such as cotton oil and mustard oil.“The ruling will also protect local farmers and reduce dependency onoutside supplies,†said a trader.He added that with the new ruling the discriminatory discount of aroundUS$80 (US$1 = RM3.80) can be narrowed down to between US$30 and US$40 inthe near future.India is Malaysia’s biggest palm oil customer buying 2.03 million tonneslast year and 2000. It bought 2.38 million tonnes in 1999.Malaysia is the world’s biggest producer of CPO producing 8.32 milliontonnes in 1986 valued at RM9.4 billion.In 2000, Malaysia produced 10.38 million tonnes and exported at about 140countries worldwide valued at RM12.47 billion.According to the Malaysian Palm Oil Board, Malaysia produced 11.803million tonnes last year of which, 10.59 million tonnes were exported.
