The pakodas in Indian homes are set to be fried in the Indonesian palm oil as imports from the traditional biggest supplier Malaysia, will become expensive. The Malaysian palm oil will become less competitive against Indonesian palm oil, after Malaysia removed the ringgit’s peg to the dollar.
The ringgit rose, making Malaysian palm oil more expensive in dollar terms compared with supplies from rival Indonesia. The Indonesian rupiah has fallen 5.1% against the dollar since the beginning of the year, while the ringgit has gained 0.5%.
India, world’s third-biggest vegetable oil importer, is also the world’s fourth-biggest palm oil user and the third-biggest consumer of soybean oil. India imported 2.02 million tons of palm oil during the current oil year (November-June), nearly 70% of the total edible oil import.
Of the total palm oil imports, India’s import from Malaysia has been to the tune of 80%, the rest was being imported from Indonesia.
“Indonesia gets more competitive and thus can export more,” Derom Bangun, chairman of the Indonesian Palm Oil Producers Association, said on Thursday in a telephone interview to Bloomberg.
Indonesia and Malaysia produce 80% of the world’s palm oil, which is processed into cooking oil and margarine and into chemicals used in soap. Indonesia exported 8.66 million tons of palm oil last year. Malaysia exported 12.6 million.
Malaysia’s peg move late last night came after China said its central bank will each day fix the band, in which the yuan will trade the next working day.
The currency will be allowed to fluctuate at 0.3% on either side of this rate.
Palm oil for delivery in October traded 0.85% lower on the Malaysia Derivatives Exchange in Kuala Lumpur, at 1,396 ringgit ($369) a metric tons, the lowest in more than five weeks.
Palm price prices in Rotterdam, traded in dollars, dropped 1.2% on Thursday to $415 a metric tons.
Palm oil, used to make soaps and detergents, is sold in dollars and ringgit. Globally, Indonesia exported 8.66 million tons of palm oil last year. Malaysia exported 12.6 million tons.
Source : http://www.financialexpress.com
July 23, 2005
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