MARKET DEVELOPMENT
PREVIEW-India\'s Sept Palm Oil Imports Seen Rising, Helped By Rupee
PREVIEW-India\'s Sept Palm Oil Imports Seen Rising, Helped By Rupee
12/10/2013 (Reuters) - India's palm oil imports may have gone up in September for the first time in four months after a rally in the rupee cut costs, a Reuters survey showed, and that trend could continue next month because of buying for the festival season.
Higher shipments from major suppliers Indonesia and Malaysia could revive calls from domestic refiners for an increase in the import duty on refined palm oil, which has the food ministry's backing.
Palm oil imports may have risen 13 percent in September from August to 614,000 tonnes, according to the average forecast from five traders. That includes refined palm oil imports, which may have risen 1.2 percent to 145,000 tonnes.
The Solvent Extractors' Association of India will release its data early next week.
Imported palm oil prices fell $8-10 a tonne from August, partly because India's rupee gained about 10 percent. The difference between refined and crude palm oil imports was only about $10 per tonne.
Refined palm oil imports rose 36 percent between Nov. 1, 2012, and Aug. 31, 2013, as Indonesia, the world's biggest palm oil exporter, structured taxes to favour exports of the refined product over crude to support its domestic refining industry.
That triggered calls from India's refiners for protection.
Palm oil accounts for about 80 percent of India's total cooking oil imports and most of it comes from Malaysia and Indonesia. India relies on imports for about 60 percent of its annual vegetable oil demand of 17-18 million tonnes.
In the year to Oct. 31, 2013, cooking oil imports could rise 10 percent from the previous year to 11 million tonnes, India's top importer of edible oil estimated in March.
The food ministry has suggested the import duty on refined palm oil should go up to at least 10 percent from 7.5 percent.
Prime Minister Manmohan Singh is visiting Indonesia this week and the issue may not feature on the cabinet agenda until after he returns on Oct. 12. Finance Minister P. Chidambaram is in Washington for G20 meetings.
Any rise in import duty would need support from the finance and trade ministries to be put into effect.
"The Indian government has repeatedly promised to hike the import tax on refined palm products but has lost its nerve at the last minute. I remain hopeful it will happen before long," prominent London-based industry analyst Dorab Mistry said.
The finance ministry was in favour of an increase earlier in the year when it was desperate to cut imports and rein in the current account deficit. India imports about $10 billion of edible oils a year -- about 2 percent of total import costs.
But the rupee's fall to a record low in August helped to stem the tide of imports and encouraged exports. That has switched attention to inflation, with the central bank making it clear that bringing consumer prices down is a priority.
The survey forecast soyoil imports rose 19 percent to 152,000 tonnes last month as the gain in the rupee spurred buying ahead of the festival season, when soyoil is preferred for making the fried food popular at family gatherings.
Total vegetable oil imports, including small amounts of non-edible oils, may have risen 16.2 percent in September from August to 881,000 tonnes, according to the survey.
"In October, imports could be higher at around 900,000 tonnes of edible oils to meet festival season demand," said Sat Narain Agarwal, a Delhi-based trader.
India's festival season runs from October to December and includes celebrations such as Diwali, the festival of lights.
Higher shipments from major suppliers Indonesia and Malaysia could revive calls from domestic refiners for an increase in the import duty on refined palm oil, which has the food ministry's backing.
Palm oil imports may have risen 13 percent in September from August to 614,000 tonnes, according to the average forecast from five traders. That includes refined palm oil imports, which may have risen 1.2 percent to 145,000 tonnes.
The Solvent Extractors' Association of India will release its data early next week.
Imported palm oil prices fell $8-10 a tonne from August, partly because India's rupee gained about 10 percent. The difference between refined and crude palm oil imports was only about $10 per tonne.
Refined palm oil imports rose 36 percent between Nov. 1, 2012, and Aug. 31, 2013, as Indonesia, the world's biggest palm oil exporter, structured taxes to favour exports of the refined product over crude to support its domestic refining industry.
That triggered calls from India's refiners for protection.
Palm oil accounts for about 80 percent of India's total cooking oil imports and most of it comes from Malaysia and Indonesia. India relies on imports for about 60 percent of its annual vegetable oil demand of 17-18 million tonnes.
In the year to Oct. 31, 2013, cooking oil imports could rise 10 percent from the previous year to 11 million tonnes, India's top importer of edible oil estimated in March.
The food ministry has suggested the import duty on refined palm oil should go up to at least 10 percent from 7.5 percent.
Prime Minister Manmohan Singh is visiting Indonesia this week and the issue may not feature on the cabinet agenda until after he returns on Oct. 12. Finance Minister P. Chidambaram is in Washington for G20 meetings.
Any rise in import duty would need support from the finance and trade ministries to be put into effect.
"The Indian government has repeatedly promised to hike the import tax on refined palm products but has lost its nerve at the last minute. I remain hopeful it will happen before long," prominent London-based industry analyst Dorab Mistry said.
The finance ministry was in favour of an increase earlier in the year when it was desperate to cut imports and rein in the current account deficit. India imports about $10 billion of edible oils a year -- about 2 percent of total import costs.
But the rupee's fall to a record low in August helped to stem the tide of imports and encouraged exports. That has switched attention to inflation, with the central bank making it clear that bringing consumer prices down is a priority.
The survey forecast soyoil imports rose 19 percent to 152,000 tonnes last month as the gain in the rupee spurred buying ahead of the festival season, when soyoil is preferred for making the fried food popular at family gatherings.
Total vegetable oil imports, including small amounts of non-edible oils, may have risen 16.2 percent in September from August to 881,000 tonnes, according to the survey.
"In October, imports could be higher at around 900,000 tonnes of edible oils to meet festival season demand," said Sat Narain Agarwal, a Delhi-based trader.
India's festival season runs from October to December and includes celebrations such as Diwali, the festival of lights.