Malaysian attempt to capture some of Indonesian palm oil market share salutes Hul and Godrej Consumer

Malaysia, the world’s second largest palm oil producer, is considering lowering the export tax on palm oil from 8% to 4-6%, according to a Reuters report. The news has been welcomed by companies such as Hindustan Unilever and Godrej Consumers, which use palm oil to make a variety of products from lipstick to noodles.

Indonesia’s broader palm oil export ban has trapped at least 290,000 tonnes of the edible oil destined for India in ports and refining plants, industry officials told Reuters.

HUL and Godrej Consumer saw a spike around 1:00 pm on May 10 when the news broke.

Therefore, Malaysia opening its export door a bit more will be a relief for supply-hit FMCG companies. The country plans to take advantage of a global shortage of edible oil to regain market share after buyers have recently pushed the product aside over environmental concerns.

India is the world’s largest importer of palm oil and relies on Indonesia for almost half of the 700,000 tons it needs each month. Buyers are expected to rush into purchases in Malaysia, but Kuala Lumpur cannot keep up with demand, warns Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consulting firm.

“Malaysian sellers are bound by their old commitments and cannot provide palm oil for fast shipments,” he told Reuters.

Palm oil accounts for nearly 60 percent of global vegetable oil shipments, with the top producer, Indonesia, accounting for about a third of all vegetable oil exports.

With contributions from Reuters

For detailed commentary on the market action on May 10, click here

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