Palm oil will continue losing market share if its prices remain elevated compared to soft oils such as soyabean and sunflower, Atul Chaturvedi, Chairman of Asian Palm Oil Alliance (APOA) and Special Advisor to Solvent Extractors’ Association of India (SEA) has said.
In his keynote address at the Globoil Asia 2025 in Bangkok, he said Indonesia is becoming more and more inward-looking as far as palm oil is concerned.
Stating that Indonesia elected a new President whose single most agenda is to ensure palm oil does not leave the shores of Indonesia and gets consumed as biodiesel within that country, he said it seems the Indonesian President had taken the criticism of palm in the Western world to heart and wants to teach them a lesson by closing the palm tap.
Opportunity for Thailand
“Incidentally it is hurting countries like India who are big consumers. I am sure this would definitely affect Indonesian finances as well,” Chaturvedi said, adding, “No wonder palm had become the costliest oil.”
Indian import numbers during November and December reflect massive drop in palm oil imports into India. January import numbers of palm oil are likely to be abysmal, he said.
Palm oil is losing market share and soyabean oil is gaining ground big time. “If this trend continues, it would be a game-changing development in our part of the world,” he said.
However, he said, a huge opportunity is unfolding for Thailand. “With Indonesia becoming more and more inward-looking as far as palm is concerned, a huge opportunity is unfolding for Thailand. Close proximity to major consuming countries such as India and China would ensure a ready market,” he said.
Food inflation fear
Stating that currency and commodity volatility may become a norm, he said the dollar can potentially become much stronger, and this may impact emerging economies and commodities negatively. “We will have to closely watch Trump mandates for biodiesel and ethanol blending. This can have major impact on sugar and edible oil prices,” he said.
Referring to the developments in India in 2024, Chaturvedi said the fear of food inflation in the first half of the year drove policy makers into overdrive to keep prices in check. Indian government kept edible oil import duty at practically zero level, and sugar exports were banned and sugar diversion to ethanol was also stopped. All this made edible oil and sugar industry lose money big time.
Boost for grain distilleries
Whatever problems the Indian sugar and edible oil sectors faced due to proactive actions to keep prices in check were reversed during second half of the year. Import duty on edible oil was increased massively by 22 per cent and this ensured domestic edible oil prices jumped more than 30 per cent. This was good for the oilseed farmer in the country as well, he said. Industry breathed a sigh of relief after ethanol from sugar was permitted. Heavy investments have gone into creating distillery capacity in the country and keeping it idle due to the ban was suicidal, he said.
After banning sugar ethanol, the Indian government gave massive incentives to grain sector distilleries by way of higher prices. “Grain-based ethanol, especially from maize, gained huge traction, and if the incentives continue we feel maize area in the country would grow exponentially at the cost of soya and pulses because of high returns to farmers,” he said, adding, “High maize ethanol resulted in very high production of DDGS which has ensured soya meal prices in the country remain subdued.”
