Palm oil producers in Indonesia are reducing their overhanging inventory by pushing discounts and aggressive sales to India. Indian demand is also on the rise in the wake of the upcoming festive season.
Producers are seeking to ease stocks, helped by Jakarta’s waiver of levies on palm oil export extended until October 31 and the reversal of an export ban in May. India is offering potential support for benchmark palm oil futures prices while threatening to cut imports of rival soybean oil and sunflower oil.
Accelerating shipments would help boost Indonesia’s palm oil stocks, which are currently ballooning from 6.69 million tonnes to 4.5-5 million tonnes by the end of September. The withdrawal will also be facilitated by the slowdown in production due to the end of the peak harvest season.
The steady escalation of export restrictions imposed by Jakarta earlier this year, resulting in a drastic three-week export ban, has led to overhanging stocks. The Indonesian government aimed to drive down local edible oil prices, which then led to a spike in world prices, hitting a record high of 7,268 Malaysian ringgit ($1,598) a ton.