KUALA LUMPUR (Nov 19): India will always be dependent on Malaysia for palm oil, as it is the cheapest edible oil in the world.

Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said India is 74% dependent on edible oil imports, as the country is heavily dependent on rainwater for the irrigation of its agricultural sector.

“In India, only 37-40 per cent of the agricultural land is irrigated, while this year, the country is expected to produce only nine million tonnes of soybeans from the expected 12 million tonnes due to the late arrival of the monsoon,” he said.

Sathia said this in his presentation titled, ‘Palm Oil Driver of Economic Sustainability’ at the Malaysian Palm Oil Board International Palm Oil Congress and Exhibition 2019 (MPOB PIPOC 2019) here today.

Hence, demand wise, he said the main growth market for palm oil would still be India and China, while in the next 10 years, the main growth markets would be India, Indonesia and China.

“China will use the mix of edible oils from Malaysia, as the country is heavily short of soybean oil due to lower crushing of soybean hurt by the recent African swine fever outbreak.

“One thing for certain is that China will depend less on coal for energy generation and move towards ethanol and biodiesel,” he said.

As for European Union (EU), he said palm oil demand would be less due to the palm bio-fuel phase-out plan in the continent.

Overall, he expected Malaysia palm oil production to rebound 4.6% to 20.3 million tonnes in 2019, while production growth for 2020 would slow by three to 3.5% to 21.0 million tonnes.

“While Malaysia is the second largest palm oil producer in the world after Indonesia, long term growth wise, if there is no faster pace of replanting, production will slow down,” he said.

As for the year-end stocks level, he anticipated it to stand at 2.8 million-3 million tonnes and fall to below two million tonnes in the fourth quarter of 2020. — Bernama

Source : The Edge Markets