India's imports of vegetable oils fell by 20% month on month in June to 996,014 mt due to a build-up of stocks at its ports, the Solvent Extractors' Association of India (SEAI), a national trade body, said in its monthly release July 13.
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Palm oil imports, which accounts for over 60% of India's vegetable oil purchases, fell 23.6% to 587,467 mt last month, the data showed.
India is the largest importer of vegetable oils in the world and imports about 14 million mt of oils annually, of which palm oil accounts for 8 million-9 million mt.
India's palm oil imports cooled off in June as a combination of higher imports in May and slower local consumption led to a build-up of vegetable oil stocks at ports, industry watchers said.
Price volatility, policy indecision from Indonesia and uncertain local demand has kept India's vegetable oil traders on tenterhooks in June, with many saying they are only catering for the minimum requirements of edible oil refineries currently to avoid getting stuck with overpriced inventory.
India has reeled under a massive second wave of COVID-19 infections since March, prompting restrictions on movement, social gatherings and the HoReCa (hotels, restaurants and catering sector), which has hit demand for palm oil.
India's imports of palm oil in the eight months between November 2020 and June 2021 rose 21.4% on the year to 5.15 million mt mainly due to palm oil's duty advantage over other vegetable oils and lower imports of sunflower oil in 2020-21, SEAI data showed.
The US Department of Agriculture forecast India's annual palm oil imports at 8.55 million mt in 2020-21 (November-October) after the country reduced its import duty on crude palm oil and refined palm oil and re-allowed imports of palm oil products.
India's policy shift
From June 30 India reduced the import duty on crude palm oil and removed restrictions on imports of refined palm oil and olein to lower prices of edible oils for retail customers – a move which may improve India's palm oil imports by 500,000 mt over July, August and September," Marcello Cultrera, institutional sales manager at Phillip Futures, told S&P Global Platts at the time.
The decision reverses the country's January 2020 order putting processed palm oil products in a restricted list to protect the interests of local vegetable oil refineries.
The June 30 decision will hit the interests of domestic vegetable oil refiners and oilseed growers, as it opens the floodgates to imports of refined oils from Nepal and Bangladesh at nil duty under the South Asian Free Trade Agreement, the SEAI said July 13.