Shipbrokers told IHS Maritime that they have been fixing more palm oil cargoes to China and India ahead of the Mid-Autumn Festival on 27 September and Ramadan on 17 July.
In addition, charterers have been hurrying to ship Indonesian palm oil out before the world’s biggest palm oil producer imposes export taxes on 1 July.
Singapore-based chemical tanker brokerage and consultancy Eastport Global commented, “Space has tightened and there are very limited prompt positions, with more space opening towards July.”
Freight rates have gone up, with cargoes being fixed at approximately USD40/tonne for an Indonesia-West Coast India trip, compared with a market rate of about USD35/tonne in early June. Southeast Asia-China rates are assessed at USD34/tonne, compared with USD30/tonne earlier this month.
Singapore-based broker SPI Marine also said that India and China are importing more palm oil on speculation of a weak and delayed monsoon for a second year straight, which will cut oil seeds output, resulting in cooking oil shortage.
India’s palm oil imports grew 39% to 907,347 tonnes in May compared with the same month in the previous year. El Nino is expected to limit rainfall from India to Indonesia and Malaysia this year, and may affect farm output.
SPI Marine said, “Hence, India and China brought forward imports of palm oil in speculation that prices may increase as a result of dry weather conditions.”