Malaysia’s palm oil exports surge after world’s top producer Indonesia imposes export ban last monthas demand for the commodity increased during a period of global edible oil supply crunch.
Malaysian palm oil deliveries surged 40% to 390,938 tonnes in the first 10 days of May from a month earlier, according to freight measurement agency Intertek.
Malaysia under pressure to increase finances in the pipeline political crisis, in seeking to take advantage of rising commodity prices, it has differentiated itself from other food protectionist exporters. Last month, Finance Minister Zafrul Aziz told the Financial Times that a surge in oil prices could help the country improve its balance sheet.
Global supply disruptions caused by the pandemic and the war in Ukraine have changed the outlook for palm oil, a commodity that has faced boycotts in the West over its links to deforestation and plantation labor abuses.
British supermarket Iceland said in March it would reverse an earlier promise The invasion of Ukraine, a major exporter of sunflower oil, stopped using palm oil, forcing it to find alternatives.
In May, Europe increased shipments from Malaysia, with shipments soaring more than 120% to 129,815 tonnes, according to Intertek.
Crude palm oil, a common ingredient in a range of food products, rose 2.3 percent to 6,461 ringgit ($1,475) a tonne in Malaysia on Wednesday.
Malaysia, the second-biggest producer after Indonesia, opposes the EU’s policy of restricting imports of goods, saying it “was misled” in 2019.
Plantation Minister Zuraida Kamaruddin said last week that Malaysia “does not want to waste a good crisis”. She said the country was unlikely to introduce protectionist policies.
“Now is the time for us to step up our efforts to combat the negative publicity that undermines the credibility of palm oil, and we should showcase the many health benefits that gold oil has to offer,” she added in a statement.
The country’s palm oil inventories rose to a five-month high of 1.6 million tonnes in April, according to the Malaysian Palm Oil Council.
Traders said Malaysia’s attempt to take advantage of the cooking oil shortage comes at a time when Indonesia’s policies have rattled markets.
“Malaysian exports will definitely increase in May,” said Jonas Lindboom, a vegetable oil trader with the Indian Farmers’ Fertilizer Cooperative.
“My personal view is that because of these changes, the industry will have to diversify sourcing to a greater extent [in Indonesia]. “
Additional reporting by Hudson Lockett in Hong Kong and Emiko Terazono in London