Costly Malaysian palmoil loses to soyaoil in India

Kuala Lumpur, March 19 (Financial Express of India) - Malaysia'spump-priming measures for palmoil have caused prices of the commodity tojump at least $20 a tonne in two weeks, making it costly than soyaoil inthe world's most important market - India.A 500 million ringgit ($131.6 million) fund to replant oil palm fields anda plan to burn 400,000 tonne of crude palmoil to cut back on productionare among the recent initiatives taken by Malaysia to boost palmoilprices.While the higher prices have fulfilled the government's aim of appeasingpoor farmers and helping them earn short-term profits, the moves seriouslyhurt palmoil's competitiveness against soyaoil in markets such as India,traders said. India, palmoil's biggest consumer, recently raised importtaxes for RBD palmolein to 92.4 per cent, meaning a typical May/Juneshipment at an FOB price of $267.50 a tonne would end up costing $582 withtaxes, freight and insurance.South American soyaoil, while costing around $300 a tonne FOB, still endsup cheaper than palmoil at $530 a tonne after refinement and freightcosts, largely due to an import levy of only 45 per cent. Dealers saidwith a projected crop of 60 million tonne this year, South American soyagrowers seemed poised to take a big chunk of the Indian market fromMalaysia and Indonesia, the world's two largest palmoil suppliers. Thecurrent rally in Malaysian palmoil also meant that Indians who had boughtforward at $20 to $30 a tonne lower than the existing prices could sell atprofit and dump the physical oil back into the local market and buysoyaoil, dealers said.