MARKET DEVELOPMENT
Palm Oil Purchases by India Decline for First Time in Six Months
Palm Oil Purchases by India Decline for First Time in Six Months
15/01/2015 (Bloomberg) - Palm oil imports by India dropped in December for the first time in six months as stockpiles in the world’s biggest buyer climbed to a record.
Shipments of crude and refined palm oils fell 3.7 percent to 823,846 metric tons from 855,766 tons a year earlier, the Solvent Extractors’ Association of India said in an e-mailed statement today. That was the first decline since June, association data show. The median estimate for imports was 700,000 tons in a Bloomberg survey.
Swelling stockpiles of imported cooking oils amid the peak period for domestic oilseed crushing may curb imports in the coming months. Inventories expanded to the equivalent of about 38 days local demand, compared with normal levels of 25 days, according to B.V. Mehta, executive director of the Mumbai-based extractors’ association. Futures in Kuala Lumpur have rebounded 22 percent from a five-year low after Malaysia and Indonesia scrapped taxes on exports to boost shipments.
“Imports should slow down because of these stockpiles,” Mehta said by phone today. “But as long as Malaysia and Indonesia have zero export taxes, they will continue to dump supplies into India.”
Palm oil futures rallied from a five-year low of 1,914 ringgit on Sept. 2 and traded at 2,343 ringgit a ton on the Bursa Malaysia Derivatives by 5:45 p.m. in Kuala Lumpur. Soybean oil, which fell for a fourth straight year in 2014, traded at 32.54 cents a pound in Chicago today.
Zero Tax
Palm oil exports from Malaysia will remain duty-free for a sixth month until February as the world’s largest producer after Indonesia seeks to boost shipments and reduce inventories to support prices. Indonesia has kept its export tax at zero for a fourth month in January.
The tax abolition boosted imports into India, expanding reserves to 2.1 million tons as of Jan. 1, Mehta said. Purchases of crude soybean oil jumped 81 percent to 97,027 tons in December from a year earlier, sunflower oil climbed to 151,626 tons from 107,149 tons and canola oil advanced 27 percent to 36,490 tons, association data showed.
“Imports have gone in favor of soft oils,” said Mehta. Soybean oil shipments jumped due to high prices of soybeans in the local markets and lower crushing because of lower profit for oil and soybean meal in the export market, he said.
Overseas purchases of all vegetable oils climbed 7 percent in December to 1.14 million tons, taking shipments in the first two months of the marketing year to 2.33 million tons, the association said. Imports jumped 12 percent to a record 11.8 million tons in the year ended Oct. 31, the association estimates. That forced the government to raise the tax on imports to protect farmers from declining oilseed prices.
India meets more than 50 percent of its demand through palm oil imports from Indonesia and Malaysia and soybean oil purchases from the U.S., Brazil and Argentina.
Shipments of crude and refined palm oils fell 3.7 percent to 823,846 metric tons from 855,766 tons a year earlier, the Solvent Extractors’ Association of India said in an e-mailed statement today. That was the first decline since June, association data show. The median estimate for imports was 700,000 tons in a Bloomberg survey.
Swelling stockpiles of imported cooking oils amid the peak period for domestic oilseed crushing may curb imports in the coming months. Inventories expanded to the equivalent of about 38 days local demand, compared with normal levels of 25 days, according to B.V. Mehta, executive director of the Mumbai-based extractors’ association. Futures in Kuala Lumpur have rebounded 22 percent from a five-year low after Malaysia and Indonesia scrapped taxes on exports to boost shipments.
“Imports should slow down because of these stockpiles,” Mehta said by phone today. “But as long as Malaysia and Indonesia have zero export taxes, they will continue to dump supplies into India.”
Palm oil futures rallied from a five-year low of 1,914 ringgit on Sept. 2 and traded at 2,343 ringgit a ton on the Bursa Malaysia Derivatives by 5:45 p.m. in Kuala Lumpur. Soybean oil, which fell for a fourth straight year in 2014, traded at 32.54 cents a pound in Chicago today.
Zero Tax
Palm oil exports from Malaysia will remain duty-free for a sixth month until February as the world’s largest producer after Indonesia seeks to boost shipments and reduce inventories to support prices. Indonesia has kept its export tax at zero for a fourth month in January.
The tax abolition boosted imports into India, expanding reserves to 2.1 million tons as of Jan. 1, Mehta said. Purchases of crude soybean oil jumped 81 percent to 97,027 tons in December from a year earlier, sunflower oil climbed to 151,626 tons from 107,149 tons and canola oil advanced 27 percent to 36,490 tons, association data showed.
“Imports have gone in favor of soft oils,” said Mehta. Soybean oil shipments jumped due to high prices of soybeans in the local markets and lower crushing because of lower profit for oil and soybean meal in the export market, he said.
Overseas purchases of all vegetable oils climbed 7 percent in December to 1.14 million tons, taking shipments in the first two months of the marketing year to 2.33 million tons, the association said. Imports jumped 12 percent to a record 11.8 million tons in the year ended Oct. 31, the association estimates. That forced the government to raise the tax on imports to protect farmers from declining oilseed prices.
India meets more than 50 percent of its demand through palm oil imports from Indonesia and Malaysia and soybean oil purchases from the U.S., Brazil and Argentina.