MUMBAI: India’s palm oil imports in July fell 10% from a month ago, as refiners ramped up purchases of rival soyoil to take advantage of New Delhi’s move to allow duty-free imports of the vegetable oil to calm all-time high prices, a trade body said on Friday.
Higher soyoil purchases by the world’s biggest edible oil importer will support US soyoil prices, but will dent rival palm oil’s share in Indian buying and force Malaysian and Indonesian sellers to offer discounts to regain the market share, traders said.
India’s palm oil imports in July fell to 530,420 tonnes from 590,921 tonnes a month earlier, the Solvent Extractors’ Association of India (SEA) said in a statement.
Soyoil imports in July jumped 125% from a month ago to a record 519,566 tonnes, while sunflower oil imports rose 30% to 155,300 tonnes.
India in late May allowed duty-free imports of 2 million tonnes each of soyoil and sunflower oil for the current and next fiscal years ending March 31, as part of efforts to keep a lid on local edible oil prices.
Through the end of June, soy oil’s premium over palm oil was less than $150 per tonne, but since palm oil attracts a 5.5% import tax, palm oil was effectively more expensive for Indian buyers, brokers said.
But again the gap between soyoil and palm oil has widened above $350 per tonne in the past few weeks, making palm oil purchases more attractive for refiners, the SEA said.
“In August, palm oil imports could rise above 700,000 tonnes. There was huge buying in July after prices were corrected,” said a Mumbai-based dealer with a global trading firm.
Malaysian palm oil prices fell to their lowest in more than a year in July.
India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Ukraine and Russia.