India's palm oil imports set to jump as tax cut lures refiners

Emami

27/11/2020 07:21

* India cuts import tax on crude palm oil to 27.5% from
37.5%
    * Country keeps duty unchanged for soyoil, sunflower oil
    * Duty cut makes CPO more than $225/T cheaper than soyoil
    * Palm oil imports could rise by 100,000 T per month

    By Rajendra Jadhav and Mei Mei Chu
    MUMBAI/KUALA LUMPUR, Nov 27 (Reuters) - India's imports of
palm oil are set to rise by as much as 100,000 tonnes a month
from December after the government slashed import tax on the
tropical oil, making it cheaper than rival edible oils, industry
officials said on Friday.
    Higher imports by India, the world's biggest buyer of palm
oil, will support benchmark Malaysian palm oil prices  FCPOc3 
that hit their highest level in eight years this month, but
could weigh on U.S. soyoil futures  BOc1 .
    India on Thursday slashed import tax on crude palm oil (CPO)
to 27.5% from 37.5% as it tries to curb rising food prices.
 urn:newsml:reuters.com:*:nFWN2IC0P3
    "The cut has made palm oil more competitive as refiners have
to pay 7.5% less tax on palm oil imports compared with soyoil
and sunflower oil," said Sudhakar Desai, president of the Indian
Vegetable Oil Producers' Association (IVPA).
    India maintained duty structure on crude soybean oil and
crude sunflower oil at 35%.
    Palm oil imports are expected to rise by around 100,000
tonnes every month from December, while soyoil imports could
moderate from January, said Sandeep Bajoria, chief executive of
Sunvin Group, a vegetable oil broker.
    "Contracts of soyoil imports have already been signed for
December shipments. From January onwards, soyoil imports would
go down to make space for palm oil," he said.
    After the duty cut, CPO has become $225 per tonne cheaper
than soyoil compared with $175 prior to the cut, Bajoria said.  
    The South Asian country imports palm oil mainly from
Indonesia and Malaysia, and other oils such as soy and sunflower
oil from Argentina, Brazil, Ukraine and Russia.
    "Set against the lower CPO production, lower CPO inventory
and weather predicaments end of this year, this (duty cut) may
lead to better CPO prices," said Joseph Tek Choon Yee, chief
executive officer of Malaysia's IJM Plantations  IJMP.KL .
    India's palm oil imports slumped 23% to 7.2 million tonnes
in 2019/20 marketing year ended on Oct. 31, the lowest in nine 
years, as the coronavirus crisis curtailed demand from hotel and
restaurants.
    In 2020/21, imports could jump 25% to 9 million tonnes,
Desai said.

 (Reporting by Rajendra Jadhav and Mei Mei Chu; Editing by
Sherry Jacob-Phillips)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))