MUMBAI: India’s palm oil imports in January dropped more than 12% from a month ago to a three-month low as negative refining margins for crude palm oil (CPO) prompted refiners to switch to rival soy oil, a leading trade body said today.
Lower purchases by the world’s biggest importer of vegetable oils could keep palm oil inventories elevated in top producers Indonesia and Malaysia, and weigh on benchmark futures FCPOc3.
Palm oil imports in January fell about 12.4% from the previous month to 782,983 metric tonnes, the Mumbai-based Solvent Extractors’ Association of India (SEA) said in a statement.
Imports of soy oil rose 23.7% to 188,859 tonnes, while those of sunflower oil were down about 15.6% at 220,079 tonnes as the oil became expensive because of higher freight rates following Houthi attacks on Red Sea shipping, the SEA said.
The lower palm oil and sunflower oil imports pulled down India’s total vegetable oil imports by 8.4% to 1.20 million tonnes, it said.
Negative refining margins in palm oil versus positive margins in soy oil have prompted a switch from palm oil to soy oil in recent weeks, said a New Delhi-based dealer with a global trade house.
“In the coming months, palm oil imports could fall further to make room for additional shipments of soy oil, which is cheaper,” the dealer said.
Crude palm oil (CPO) imports are being offered at about US$932 a metric tonne, including cost, insurance, and freight (CIF), in India for March delivery, while soy oil and sunflower oil are offered around US$919 and US$925 a tonne, respectively, dealers said.
India buys palm oil mainly from Indonesia, Malaysia, and Thailand, while it imports soy oil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.
The rebound in palm oil prices is likely to be capped by abundant supplies of rival soy oil and sunflower oil, “soft” oils that are available at discounts to tropical palm oil for the first time in more than a year, industry officials said last week.