Lower imports by India, the world's biggest vegetable oil importer, could weigh on benchmark Malaysian palm oil futures that are currently trading near their lowest in three years.
India imported 487,147 tonnes of palm oil in June, the lowest since February 2014, the Solvent Extractors' Association of India (SEA) said in a statement https://bit.ly/2mjvYJ9.
Palm oil imports are likely to rebound from July as India has raised import taxes on soft oils like sunflower and soyoil, making palm oil competitive again, industry officials told Reuters.
"From July, palm oil imports could rise 750,000 tonnes per month. It has again become competitive due to the recent price correction," said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil importer.
In March, India raised its import tax on crude palm oil to 44 percent from 30 percent and lifted the tax on refined palm oil to 54 percent from 40 percent.
It then kept the duty on soft oils unchanged making them more competitive in the local market.
As the duty difference has narrowed, sunflower oil imports would moderate in coming months, Bajoria said.
Palm oil imports may also rise because of upcoming festivals, said Govindbhai Patel, managing director of trading firm G.G. Patel & Nikhil Research Company. Fried food consumption in India typically rises during religious festivals.
In June, India's total vegetable oil imports fell 22.4 percent from a year ago to 1.04 million tonnes, the lowest since January 2017, the SEA data showed.
India relies on imports for 70 percent of its edible oil consumption.
The country's soyoil imports nudged down 0.8 percent in June to 288,519 tonnes, while sunflower oil imports jumped 31 percent to 221,249 tonnes, the trade body said.
Vegetable oil imports in the first eight months of the current marketing year that started in November fell to 9.65 million tonnes from 9.87 million tonnes a year earlier, the SEA said.
The country buys palm oil from Indonesia and Malaysia and soyoil mainly from Argentina and Brazil, while it purchases sunflower oil from Ukraine. - Reuters
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