The edible oil industry in India got a big relief after top grower Indonesia clarified it would only halt exports of some palm oil products instead of a complete ban as widely expected, according to Ruchi Soya Industries Ltd.
India is the world’s biggest importer of vegetable oils and is particularly at risk from Indonesian policy changes. Indonesia said Friday it would ban all exports of cooking oil before clarifying days later it only applies to RBD palm olein and not crude palm oil, a move that’s sparked wild swings in the market.
“We are very comfortable now with the clarification,” Ruchi Soya Chief Executive Officer Sanjeev Asthana said in a Bloomberg Television interview on Tuesday. “I don’t anticipate much of a problem going forward,” he said. The company is one of the largest cooking oil and oilseed processors in India.
While the ban on palm olein accounts for 30% to 40% of Indonesia’s palm oil shipments, less than initially feared, it could still have serious ramifications for the world as the country accounts for a third of global vegetable oil trade. World food prices are already at a record high and can ill afford another disruption to food supply after massive chaos sparked by the war in Ukraine.
Edible oil prices in India have been rising, putting the government on notice. Authorities have abolished import duties and clamped down on hoarding, but prices continued to climb. Local prices of edible oils have surged as much as 17% in New Delhi since the war in Ukraine erupted late February.
Russia’s invasion of Ukraine hit vegetable oil supplies from the two nations that ship about 80% of sunflower oil cargoes. India can replace sunflower oil supplies with soybean oil, Asthana said. A large winter-sown rapeseed crop will also help to boost availability of cooking oils in India.
Still, it would be a challenge in the next three to four months if “the conflict continues longer than what we think,” Asthana said.
India imported about 500,000 tons of crude palm oil from Indonesia in the five months ended March, while RBD palm olein purchases totaled 475,000 tons, according to data compiled by the Solvent Extractors’ Association of India.