Lower Export Duties Led to an Increase in India's Import of Palm Oil

India's March palm oil imports increased 28% from an eight-month low in February, as discounts on the tropical oil drove refiners to reduce purchases of soy oil and sun oil, as per five dealers.

According to traders, the increase in palm oil imports by India, the world's largest importer of vegetable oils, might help Malaysia reduce its stocks and strengthen palm oil prices.

According to an average of dealer estimates, India's palm oil imports increased to 750,000 tonnes last month, up from 586,007 tonnes in February.

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Palm imports increased in March as the oil traded at a USD 150 discount to soy oil and sun oil in the previous month and first half of March, prompting refiners to increase purchases, according to Sandeep Bajoria, CEO of vegetable oil brokerage Sunvin Group.

Soy oil imports decreased 27% in March to 259,000 tonnes, while sunflower oil imports declined 4% to 150,000 tonnes, the lowest level in five months, according to dealers.

Soy oil imports fell as the oil's premium over palm and sun oil rose owing to a drought in Argentina, according to Rajesh Patel, managing partner at GGN Research.

Argentina, the world's largest soy oil exporter, may reduce soybean production to 25 million tonnes in the 2022-2023 crop cycle, down from an early forecast of 48 million tonnes due to a drought that reduced yields.

India mostly purchases palm oil from Indonesia, Malaysia, and Thailand. Argentina, Brazil, Russia, and Ukraine supply it with soybean and sunflower oil.

Palm oil imports are expected to dip in April and May since the oil's discount to rivals has dropped below USD 70 per tonne from as high as USD 500 in the December quarter, according to a Mumbai-based dealer with a global trade business.

"Sun oil is being used by refiners." They could see a lot of sun oil landing in April and May," the trader said.

Palm Oil Price Trend and Forecast

North America

Palm oil prices plummeted as a result of lower demand from North American downstream sectors. The recent lifting of the export ban has reduced the price of Indonesian palm oil.

North American countries import it from Asia Pacific countries, mostly Malaysia and Indonesia. Due to a surplus of inventory on the local market, the product's price was later cut.

The unexpected relaxation of the ban by Indonesia benefited in maintaining downstream demand and lowering the price of the product.

APAC

Palm oil prices fluctuated in Asia-Pacific countries due to volatile market sentiment towards the product. The Chinese palm oil market has continued to deteriorate, allowing prices to remain low.

The palm oil price for Malaysia's futures market has plunged after the abolition of export levies in Indonesia, the world's largest producer of palm oil.

As a result, regional Palm Oil futures have declined in tandem with the market. Furthermore, prices declined as a result of enormous domestic stocks. Following then, prices soared due to increased demand from end-user industries.

Europe

Palm oil prices in Europe have recently declined, assisted by the product's current cheap pricing. Prices are currently falling as a result of low consumer confidence in the domestic market.

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There were no supply problems in the domestic market due to ample supplies. Later, as a result of Indonesia relaxing its export ban, prices fell, but this had no long-term impact on the European region.

Prices fell again in Europe because there was little demand and plenty of supply.

As per Procurement Resource, India's March palm oil imports climbed 28% from an eight-month low in February, as discounts on the tropical oil catalyzed refiners to lower purchases of soy oil and sun oil. According to merchants, India's increased imports of palm oil, the world's largest importer of vegetable oils, may assist Malaysia reduce its stocks and enhance palm oil prices.

India's palm oil imports surged to 750,000 tonnes this month, up from 586,007 tonnes in February, according to an average of dealer estimates. According to Sandeep Bajoria, CEO of vegetable oil brokerage Sunvin Group, palm imports climbed in March because the oil traded at a USD 150 discount to soy oil and sun oil in the previous month and first half of March, leading refiners to increase purchases.