Mumbai: Indian refiners have resumed buying Malaysian palm oil after a gap of nearly a month and contracted around 70,000 tonnes of shipments in December as Kuala Lumpur has been offering a $5 per tonne discount over supplies from rival Indonesia, five traders told Reuters on Thursday.
The resumption in purchases by India, the biggest buyer of Malaysian palm oil this year, could support Malaysian palm oil prices, which are near their highest in two years.
Palm oil is crucial for Malaysian economy as it accounted for 2.8 per cent of Malaysia’s gross domestic product last year and 4.5 per cent of total exports.
Indian refiners stopped purchases from Malaysia last month, fearing New Delhi could raise import taxes or enforce other measures to curb imports after Kuala Lumpur criticised New Delhi for its actions in Kashmir.
Malaysian palm oil is available at a $5 discount amid congestion at Indonesian ports, said a Mumbai-based dealer with a global trading firm.
“This is giving a few buyers a reason to start buying Malaysian oil in small quantities to run their refineries.”
Malaysian crude palm oil (CPO) for December shipment on the Indian west coast was available at $603 on a cost and freight basis (C&F) on Thursday, while Indonesian CPO was quoted at $608, dealers said.
Indonesia is the world’s biggest producer of palm oil, followed by Malaysia.
In October, India’s top vegetable oil trade body told members to stop buying palm oil from Malaysia in a call aimed at helping New Delhi punish the country for criticising India over its policy towards Kashmir.
