Pakistan has announced that it will import a larger volume of palm oil from Malaysia to help cushion losses after top customer India added more restrictions on Malaysian imports amid a diplomatic conflict.
India applied new curbs on imports of Malaysia's refined palm oil and informally asked traders to stop negotiating with the country, the largest producer of the edible oil in the world.
The prohibition was a form of retaliation by India for the Southeast Asian nation's backlash of its government's new religion-based citizenship policy and it's ruling on Kashmir, the sources disclosed.
On Tuesday, Prime Minister Mahathir Mohamad announced that he brought up the issue on palm oil with Pakistan Prime Minister Imran Khan who flew in to Malaysia for a diplomatic visit and that Pakistan said it was interested in importing the commodity from Malaysia.
Asked by reporters in a media briefing, Khan said that they would do their best "to compensate" for Malaysia's lost profits as a result of India's import restrictions. "That is correct, especially since India threatened to cut palm oil imports," he said.
India is a Hindu-majority nation while Pakistan and Malaysia are mainly Muslim. Pakistan and India have been at loggerheads since the partition of British India in 1947, and have engaged in three wars over competing territorial claims in Kashmir.
Pakistan may have imported approximately 135,000 tons of Malaysian palm oil in January, a record number, Indian-based traders who monitor such deliveries disclosed to Reuters under anonymity.
The volume is similar to Refinitiv's projections of 141,500 tons, which indicate shipments to India in January may have plummeted 80 percent from the previous year to 40,400 tons. Malaysia is set to release official figures this week.
According to the Malaysian Palm Oil Council, Pakistan bought more than 1 million tons of palm oil from Malaysia in 2019, while India bought 4.3 million tonnes.
Malaysian palm oil futures were up late Tuesday following Khan's comments and on estimates of a huge decline in January orders.
Meanwhile, inventories of Malaysian palm oil probably fell to its lowest since June 2017, as arid climate and lower fertilizer use in the second biggest palm producer reduced output to almost four-year lows, a study by Reuters revealed.
According to a median estimate of nine planters, traders and analysts surveyed by Reuters, January stockpiles in Malaysia are expected to drop 12 percent to 1.76 million tonnes from December, the lowest in two and a half years.
