CPOTR price movement decreased by 6.82% in the week to a level of IDR 11,685/Kg after buyers in southern India replaced palm oil with sunflower oil, which is traded at a big discount compared to tropical oil and Malaysia said they are not hiring workers from Bangladesh.
India's Trade Administration said India's palm oil imports in April slumped 30% from the previous month to a 14-month low, as premiums over rival soft oils prompted buyers to switch to sunflower and soybean oils. Sunflower oil is traded at a large discount compared to tropical oils, sun oil usually has a premium price over palm oil and is traded at a premium as high as $500 per tonne by 2022. India's imports of sun oil in April jumped 68% from previous month, while soy oil imports edged up 1.4% and for palm oil imports, the Solvent Extractor's Association of India of India (SEA) reported a decrease to 510,094 tons last month from 728,530 tons in March.
From Malaysia's side, some of Malaysia's biggest palm oil producers are not hiring workers from Bangladesh due to concerns over exploitative practices during recruitment, according to labor firms and consultants, which market players say is also fueling fears of a labor shortage in the world's second largest producer. Previously, Malaysian Government suspended all recruitment from Bangladesh in 2018 following corruption allegations in the process. Although new employment agreements between the two countries went into effect last year, three plantation companies said they had not resumed hiring Bangladeshi workers.
Indonesia and Malaysia's Visit to Brussels Regarding EU Deforestation
Two of the world's largest palm oil producers Indonesia and Malaysia are rumored to be sending high-ranking officials to the European Union and have confirmed a visit to Brussels on May 30-31 to raise concerns over new deforestation laws that both countries believe will hurt small farming businesses. Previously, the European Parliament approved a deforestation law last month to ban imports of coffee, beef, soybeans and other commodities into the EU unless companies can provide “verifiable” information that the products were not grown on deforested lands after 2020. Those who violate will face hefty fines. In news circulating the Coordinating Minister for the Economy Airlangga Hartarto said "The law will burden small farmers with burdensome administrative procedures. The law can exclude the important role of small farmers in global supply chains and fail to recognize their significance and rights."
Cooperation between Indonesia and Iran
Indonesian and Iranian leaders on (23/23) signed a preferential trade agreement to expand economic relations during the official visit of Iranian President Ebrahim Raisi. President Joko Widodo hopes the agreement will boost trade between Indonesia and Iran. Indonesian trade ministry official Djatmiko Bris Witjaksono said on Tuesday that the two countries had agreed on a "counter-trade" scheme in which goods and services could be exchanged "without being limited by scarcity or currency difficulties". Under Tuesday's deal, Iran will give Indonesia greater access to products such as processed food and medicines, textiles, palm oil, coffee and tea, while Indonesia will lower tariffs on oil, chemical, metal and some milk products.
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Source: ICDX Research