KUALA LUMPUR (Reuters) - Malaysia voiced its commitment to further strengthen diplomatic and trade ties with India, after the world’s largest edible oil buyer renewed purchases of Malaysian palm oil, in a sign of improving relations between the two countries.
Indian buyers contracted up to 200,000 tonnes of Malaysian crude palm oil for June and July, after a four-month gap following a diplomatic row.
Malaysia’s exports to India in January to April fell to 96,145 tonnes, down 94% from the same period in 2019, Plantation Industries and Commodities Minister Mohd Khairuddin Aman Razali said on Thursday.
But crude palm oil prices falling below Malaysia’s palm oil duty threshold level and New Delhi’s decision not to extend restrictions on refined palm oil imports have led to an increase in purchases, he said.
Malaysia, the world’s second-largest palm oil producer and exporter, slashed the June palm oil export duty to zero, lowering its price against rival Indonesian palm.
Palm oil futures traded on the Bursa Malaysia spiked 47% to 66,427 lots on Wednesday compared to the daily average of 45,200 lots last week, Mohd Khairuddin said.
He added that Malaysia’s readiness to address a trade deficit between the two countries has also led to more Indian buying.
Malaysia contracted to import a record 100,000 tonnes of rice from India for shipment this month and next.
“The government expects this positive development to strengthen palm oil prices in the market,” Mohd Khairuddin said, adding that it will also support the industry, especially smallholders.
Smallholders in Malaysia and Indonesia - which together account for 85% of global palm oil production - are reducing fertiliser use due to a plunge in fresh fruit bunch prices, a risk to next year’s output.
Reporting by Mei Mei Chu; Editing by Tom Hogue and Christian Schmollinger