Indian buyers have scaled back their palm oil purchases for December and January shipments, attributing the decision to escalating prices and refiners confronting negative margins. Industry officials, speaking to Reuters on Thursday, highlighted the challenges faced by refiners who engaged in substantial imports in the preceding months.
Reduced acquisitions from the largest global importer of vegetable oils may result in increased palm oil stocks in major producing countries like Indonesia and Malaysia. This could exert downward pressure on benchmark futures, currently hovering near their highest levels in the past two months.
“Traders are attempting to liquidate stocks accumulated at ports due to aggressive imports in recent months,” stated Rajesh Patel, managing partner at edible oil trader and broker GGN Research.
“Currently, there’s no import parity. Older imported stocks are being offered at lower prices compared to the price of new shipments.”
Traders have indicated that the landed cost of crude palm oil for December shipments on the west coast, excluding import taxes, is INR 77,500 per metric ton. Meanwhile, previously imported oil is being presented at INR 76,500.
Vegetable oil stocks in India rose to 3.3 million tons on November 1 from 2.46 million tons a year ago, propelled by increased imports during the period from July to September, as reported by the Solvent Extractors’ Association of India.
Expressing apprehension about the durability of the recent price surge, buyers are exercising caution in placing new import orders, according to Sandeep Bajoria, the CEO of Sunvin Group, a vegetable oil brokerage.
A dealer based in New Delhi from a global trade house mentioned that the deceleration in new purchases might lead to a decrease in imports for December and January.
He mentioned that the growing availability of domestic soyoil and cottonseed oil has also reduced the necessity for imports.
According to Patel from GGN Research, India’s palm oil imports in November are expected to decline to 770,000 metric tons from the previous year’s 1.1 million tons.
He mentioned that imports of soyoil and sunflower oil in November might decrease to 130,000 tons and 150,000 tons, respectively.
India predominantly procures palm oil from Indonesia, Malaysia, and Thailand, while soyoil and sunflower oil are sourced from Argentina, Brazil, Russia, and Ukraine.
