Malaysia’s palm oil exports are estimated to have declined in August as weaker-than-expected demand from India, one of the world’s largest vegetable-oil importers, weighed on shipments. According to the median estimate from a Bloomberg survey of eight plantation executives, traders and analysts, Malaysian palm oil shipments fell 8% month-on-month to about 1.3 million tonnes.
The decline comes after stronger Indian buying in July ahead of the festival season. India’s palm oil imports surged nearly 50% from June to 730,965 tonnes in July, helping Malaysian exports rise 14.5% during the month. However, that buying momentum did not continue into August, with festival-related demand proving weaker than expected.
A key factor behind the slowdown is the narrowing price advantage of palm oil over competing vegetable oils. Malaysian palm oil prices have risen about 7% in the third quarter and are trading close to a two-year high. Higher prices have encouraged price-sensitive Indian buyers to switch towards cheaper soybean oil, according to Anilkumar Bagani, head of research at Mumbai-based Sunvin Group.
The weaker export performance is expected to contribute to a build-up in Malaysian inventories. Stockpiles are estimated to have increased by around 6% in August, reaching their highest level since January. At the same time, Malaysian palm oil production is estimated to have risen about 2% to 1.8 million tonnes during the month, adding to available supplies.
The market is also watching developments on the supply side. Concerns that an El Niño weather pattern could affect palm oil production in coming months have supported prices. Meanwhile, Indonesia, the world’s largest palm oil producer, is directing more of its production towards biodiesel, potentially tightening the amount available for export and providing additional price support.
For Malaysia, sustained weakness in Indian demand could put further pressure on exporters if inventories continue to rise. India remains an important destination for Malaysian and Indonesian palm oil, and shifts in Indian buying patterns can have a direct impact on international vegetable-oil prices and trade flows.
Official Malaysian Palm Oil Board data for August is due to provide a clearer picture of production, exports and inventories by September 10. The figures will be closely watched to determine whether the August slowdown was temporary or signals a broader shift in Indian demand