Lower duties, tight stocks push India’s palm oil imports in August
India’s palm oil imports in August jumped by more than 61% on the month to 750,134 mt, according to data published by a national trade body, as bulk buyers looked to pad up edible oil inventories ahead of India’s upcoming festival season.
Lower duties in India and Indonesia, along with tighter domestic stocks ahead of the festival season, have contributed to the sharp increase in imports over the last month, Anil Kumar Bagani, head of research at Mumbai-based vegetable oil brokerage Sunvin Group, told S&P Global Platts.
Due to a relaxation in policy for imports of RBD Palmolein — refined bleached, deodorized palm oil — deliveries of refined palm oil into India increased many-fold to 187,471 mt in August and are likely to continue to see similar volumes in the coming months, the Solvent Extractors’ Association of India said in its monthly imports press release on Sept. 15.
Before July, almost all of India’s palm oil imports were in the form of crude palm oil, which would then be processed and sold by domestic refiners.
India’s palm oil imports rose in August due to “the much-improved RBD import margins vs soft oil, the change in import policy for RBD & the supportive Indonesian export duty and levy structure,” according to Marcello Cultrera, institutional sales manager and broker at Kuala Lumpur-based Phillip Futures.
Imports of soft oils, mainly soybean and sunflower oil, decreased in August due to high prices, SEA said. Soybean oil, India’s most imported soft oil, fell sharply by 51% on the month to 182,459 mt.
Port stocks of edible oils have slightly increased by 55,000 mt to 1.75 million mt as on Sept. 1 from 1.69 million mt as on Aug. 1, monthly data from SEA showed.
India is the largest buyer of vegetable oils in the world and imports about 15 million mt of vegetable oils annually, of which palm oil accounts for 8 million-9 million mt.
On Sept. 10, India’s Ministry of Finance reduced the base import duty applied to all crude vegetable oil uniformly to 2.5%. Earlier, CPO used to be charged a base duty of 10%, while crude soybean oil and crude sunflower oil were charged a base duty of 7.5%.
This latest restructuring of taxes has reduced the effective tax rate for CPO, crude soybean and sunflower oils to 24.75% from the earlier 30.25% in a bid to further ease high edible oil prices in the country.
The ruling has also cut back the import tax on refined palm, soybean and sunflower oils.
The further reduction in import taxes will help spur buying and India’s palm oil imports may range between 800,000 mt and 900,000 mt in September, according to Aditya Jeripotula, head of the edible oils and oilseeds analyst’s division at commodity research company TransGraph Consulting.
SEA also said that there will be an increase in the import of rapeseed oil in September to fill the shortage of mustard oil in the country.
However, total import of vegetable oils for the year 2020-21 are expected to be lower than the last year as high edible prices are destroying demand, SEA head BV Mehta said at an virtual palm oil conference on Sept. 8.
India is a very price sensitive market and current high prices are likely to reduce demand further. Edible oil imports could fall to about 13.1 million mt, about 2 million mt lower than the 15 million mt it used to import before the pandemic, Mehta had said.