Indonesia’s broader palm oil export ban has held at least 290,000 tons of the edible oil destined for India at ports and oil mills at the world’s largest producer, four industry officials told Reuters on Thursday.
The disruption in shipments after Indonesia extends its export ban to include crude and refined palm oil will lead to a shortage of vegetable oil in India, the largest importer, officials said. Malaysia’s second-largest exporter is already struggling to meet higher demand, charging near-record prices for fast shipments, they said.
“Our 16,000-ton vessel is stranded in the port of Kumai in Indonesia,” said Pradeep Chowdhry, director of Gemini Edibles & Fats India Pvt Ltd, which purchases approximately 30,000 tons of Indonesian palm oil each month.
“We don’t know when Indonesia will lift the ban and deliver jammed shipments.”
India is the world’s largest importer of palm oil and depends on Indonesia for nearly half of the 700,000 tons it receives each month.
Buyers are now rushing to make purchases from Malaysia, but Kuala Lumpur cannot meet demand, said Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consulting firm.
Malaysian sellers are obliged to honor their old obligations and cannot supply palm oil for fast shipments, he said.
Palm oil — used in everything from pastries and cooking oil to cosmetics and cleaning products — accounts for nearly 60 percent of global vegetable oil deliveries, and top producer Indonesia accounts for about a third of all vegetable oil exports.
India supplies almost two thirds of the demand for vegetable oil through imports. New Delhi relied on palm oil after supplies of sunflower oil from top exporter Ukraine were halted over what Russia calls its “special operation” in the country.
Palm oil traded at a steep discount to soybean and sunflower oil earlier this month, prompting Indian buyers to buy more palm oil for shipment in May, said a Mumbai-based dealer at a global trading company.
“That amount is now stuck because of Indonesia’s surprise move,” he said.
The Black Sea countries account for 60 percent of world sunflower oil production and 76% of exports, while Indonesia and Malaysia account for the bulk of global palm oil deliveries. Argentina, Brazil and the United States are major suppliers of soybean oil.
“There would be a shortage in the market. There is no way to increase stocks,” said Govindbhai Patel, director of trading company GG Patel & Nikhil Research Company.
Limited supplies amid strong demand next month from weddings and festivals could push prices in India, Patel said.