India's palm oil imports are likely to have dropped in February from an all-time high the previous month, as a duty hike to curb cheap imports from Southeast Asia and higher stock levels slowed overseas purchases, a Reuters survey showed on Tuesday.
India is the world's biggest importer of vegetable oils and leading producers Indonesia and Malaysia have been vying to make their oils more attractive by varying tax levels. India has retaliated with an import duty hike of its own.
New Delhi slapped a duty of 2.5 percent on crude palm oil during the second half of January to curb imports, but refiners have demanded a further rise to protect themselves and domestic oilseed growers. "The small duty hike with high level of stocks is expected to lower monthly palm oil imports," said Govindbhai G. Patel, a trader based in the western oilseed centre of Rajkot.
India's total stocks of edible oil may have hit a record in February at around 1.9 million tonnes, B.V. Mehta, the head of industry body the Solvent Extractors' Association (SEA), which publishes the import data, said a week ago. Stocks are shifting from producing countries to consumers, with both India and China, the other major world buyer, taking advantage of cheap palm oil and lower import tariffs to ramp up purchases while holding down the impact on inflation.
Patel also said imports had been trimmed by expectations for a further hike in the import duty in the February 28 budget and higher domestic cooking oil supplies as the rapeseed harvest rolled in. However, the budget omitted any such duty increase. Palm oil imports are forecast to have dropped 11.1 per cent to an average of 794,000 tonnes in February, the survey of five traders showed, with about 150,000 tonnes of refined palm oil imports.
Imports of vegetable oils, including non-edible oils, fell 15.2 percent to 981,500 tonnes in February from the all-time high of around 1.2 million, mainly due to the decline in palm oil imports, the survey showed. "Imports could be down in March to about 800,000 tonnes, due to the high level of imports during the last two months," said R.K. Singhal, an analyst based in New Delhi.
Imported refined palm oil was quoted at $860 per tonne on the country's west coast, while the delivered price for crude palm oil was $830 per tonne, narrowing the spread between the two palm variants from around $70 a tonne a month ago. India imports 8 million to 9 million tonnes a year, or about half its total demand. Palm oil accounts for about 80 percent of imports.
As India's population grows in size and wealth, demand for cooking oils is rising. New Delhi tries to encourage local oilseed production, partly by guaranteeing minimum prices to farmers, but has had limited success. India buys mainly palm oils from Malaysia and Indonesia and a small quantity of soyaoil from Brazil and Argentina. Soyaoil and sunflower imports are also expected to have declined last month after huge imports in the previous month, for use at celebrations during the wedding season just ending. Soyaoil imports are likely to have fallen 13.6 percent to 89,000 tonnes last month, while sunflower imports could fall by 43.2 percent to 74,000 tonnes from the previous month.
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