Indonesia’s palm oil producers are reportedly reducing their large inventory stocks by offering competitive discounts to their customers. The country is also boosting its sales to India, where the demand for palm oil is increasing ahead of the Diwali festivities next month.
Manufacturers are proposing tempting prices to their clients to reduce their inventories. This is being supported by Jakarta’s recent extension of tax waivers related to palm oil exports until the end of October and reversal of the export ban that had earlier prevented them from participating in international trade.
According to Sandeep Bajoria, CEO of vegetable oil brokerage and consultancy Sunvin Group, India had been actively importing palm oil from Indonesia due to the favorable prices and impending festival demand.
According to data presented by trade agency, The Solvent Extractors’ Association of India (SEA), India might import nearly 2 million tons of palm oil between August and November this year. This is triple the amount of palm oil the country had imported from Indonesia, the largest producer in the world, in the preceding four months, from April to July.
Eddy Martono, Secretary General at the Indonesian Palm Oil Association (GAPKI), stated that the growing momentum in shipments could assist Indonesia in bringing its palm oil stocks back to 4.5 to 5 million tons by the end of September. These stocks had grown from about 4 million tons at the end of 2021 to 6.69 million tons by June-end.
The Indonesian government wanted to lower the cost of edible oils locally, but this move increased the global prices, which reached a record high of $1,598 per ton.
The price of palm oil futures has now decreased by almost half from its record high, and the product is once more being offered at a significant discount compared to rival oils. According to traders, palm oil is being sold for $940 per ton, inclusive of cost, insurance, and freight (CIF), to India for the September shipment as compared to $1,288 for crude soy oil.