By Krishna N. Das
KUALA LUMPUR (Reuters) - Malaysia's Sime Darby, the world's largest oil palm planter by land size, could export more crude palm oil (CPO) to India and divert refined oil to other markets after India placed curbs on refined imports, an executive told Reuters on Friday.
India, the world's biggest buyer of edible oils, last week changed rules to effectively, say traders, ban imports of refined palm oil from Malaysia, the world's second-biggest producer and exporter of palm oil after Indonesia.
The step came after repeated objections by India's Hindu nationalist government to criticism from Mahathir Mohamad, the prime minister of Muslim-majority Malaysia, of some recent policies that critics say discriminate against Muslims. The move was also aimed at helping Indian refineries raise their utilisation.
Traders in India are already buying more Indonesian crude palm oil as a result, even at a premium to Malaysian prices.
"Regulatory challenges are part and parcel of the palm oil industry. (But) we have yet to see the impact of India’s recent decision on our export volume to India," Mohd Haris Mohd Arshad, managing director of Sime Darby Oils, said.
"Nevertheless, Sime Darby Plantation is well placed to manage this risk if it arises, given our presence in both Malaysia and Indonesia. Since our existing export sales from both Malaysia and Indonesia include CPO and refined products, we are able to direct shipments of refined products to other countries, and CPO to India."
He did not immediately say how much it sold to India last year, but historically the South Asian country is one of its top-3 markets.
In the first nine months of last year, Sime Darby produced http://www.simedarbyplantation.com/sites/default/files/investor-relations/Sime%20Darby%20Plantation%20Q3FY2019%20Analyst%20Briefing.pdf about 4 million tonnes of fresh fruit bunches, the raw material for palm mills, in Malaysia. About half that amount was produced in neighbouring Indonesia.
Malaysian CPO prices were about 3% higher on average than those of Indonesia during that period.
"For Sime Darby Plantation, the group exports mainly CPO to India," TA Securities said in a note. "As such, the impact to the group’s earnings should be minimal."
India's palm oil imports in the marketing year to Oct. 31 could fall to between 8.4 million and 9 million tonnes from 9.4 million last year, a spot survey of six industry officials showed, hit by a rally in prices and the row with Malaysia.
(Reporting by Krishna N. Das; Editing by Kirsten Donovan)