India's Jan vegoil imports to hit record on palm buying

NEW DELHI: India's vegetable oil imports are expected to have jumped nearly 29 percent to an all-time high in January on record purchases of cheap palm oil from Indonesia and especially Malaysia, a Reuters survey showed.

Malaysia, the world's No. 2 producer of palm oil, made exports duty-free from Jan. 1 and Indian buying soared until New Delhi applied duties on imports mid-month to protect domestic players. Traders expect February imports to ease as a result.

India's vegetable oil imports were 1.1-1.2 million tonnes last month, traders forecast, with palm oil imports jumping 14.1 percent to hit a record of 893,750 tonnes, the average forecast in the survey of eight traders showed on Monday.

"Malaysia's zero duty regime for crude palm oil in January led to the record imports," said Sat Narain Agarwal, a Delhi-based trader.

India is the world's largest vegetable oils importer, buying in around 8-9 million tonnes a year or about half its total consumption. 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.

It has now taken to taxing imports to protect domestic oilseed growers and crushers from aggressive pricing by Malaysia and rival Indonesia, the world's biggest palm oil producer.

India also buys a small quantity of soyoil from Argentina and Brazil.

New Delhi applied a 2.5 percent import duty on crude palm oil during the second half of January to cut the imports.

"Imports could be down in February to around 900,000 tonnes on a lower CPO purchase as result of the import duty hike," said Pradip Desai, a Mumbai-based trader.  Traders said crude palm oil (CPO) imports could have been as high as 825,000 tonnes last month, while refined palmolein imports are expected to be 75,000-125,000 tonnes.

In December, India imported 628,618 tonnes of CPO and 137,475 tonnes of RBD palmolein, according to the Mumbai-based Solvent Extractors' Association of India (SEA).

"Lower palm oil prices by about $30 per tonne in the first half of January supported the higher imports," Agarwal said, referring to Malaysia's decision to remove export duties.

Imported refined palmolein averaged $812 per tonne CIF in December, while the average delivered CPO price stood at $739 a tonne, according to the SEA's data.

Soyoil and sunflower imports are also likely to have risen last month as the soft oils are preferred during the winter season when demand for fried foods at wedding feasts surges. Palm oil tends to solidify at lower temperatures.

Soyoil imports are likely to have risen more than five times to 115,250 tonnes last month, while sunflower imports could be more than doubled to 120,856 tonnes from the previous month.

The survey showed average estimated stocks at Indian ports at the end of January up 19.2 percent to 775,000 tonnes from December, reflecting the surge in monthly purchases.

SEA is expected to release its monthly import data for January later in the week.