 "India’s palm oil import cancellations surge as refiners respond to soaring prices and increased duties, opting for profit over purchases.")
India’s palm oil refiners have canceled 100,000 metric tons of palm oil deliveries planned for October to December, reacting to a significant rise in global palm oil prices and a recent increase in import duties. The Indian government raised import taxes on crude and refined edible oils by 20 percentage points, pushing the total duty on crude palm oil to 27.5 percent. This unexpected price surge has prompted refiners to opt for profitability by canceling existing contracts instead of proceeding with purchases. With palm oil now trading at a premium, many buyers may shift their preferences to cheaper alternatives like soyoil and sunflower oil, particularly as winter approaches when palm oil solidifies at lower temperatures.
Title: India Cancels Palm Oil Purchases as Prices Soar
Palm Oil | Image: Wikimedia Commons
In a surprising move, Indian refiners have cancelled 100,000 metric tons of palm oil purchases scheduled for delivery between October and December. This decision comes in response to a recent hike in import duties implemented by the Indian government, which was triggered by a significant increase in overseas prices. According to five trade officials, refiners opted to book profits rather than proceed with their orders.
This cancellation, which occurred over the last four days, includes a notable 50,000 tons that were called off just on Monday. As Malaysian palm oil futures reached their highest levels in two and a half months, the Indian Market‘s reaction is expected to temper this price rally. Interestingly, this shift might also boost soyoil prices as some refiners consider switching from palm oil to soyoil.
Earlier this month, India raised the basic import tax on crude and refined edible oils by 20 percentage points. As a result, the total import duty on crude palm oil has increased to 27.5 percent from the previous 5.5 percent. An Indian buyer, operating a refinery on the east coast, commented on the unexpected nature of these changes, stating that refiners could potentially make more money by cancelling their previous orders instead of refining and selling the oil.
India generally imports around 750,000 tons of palm oil each month, so the recent cancellations represent about 13.3 percent of the country’s monthly imports. Currently, crude palm oil is offered at approximately $1,080 per ton for October delivery, starkly contrasting the $980 to $1,000 range from just a month ago.
As buyers weigh their options in light of these price shifts, many are leaning towards cheaper soyoil and sunflower oil instead of costly palm oil, especially as India’s palm oil imports typically decrease during winter when temperatures rise. Refiners in India, who mainly source palm oil from countries like Indonesia, Malaysia, and Thailand, are now reevaluating their procurement strategies amid these volatile Market conditions.
This decision and its implications could significantly reshape India’s edible oil import landscape as we move into the winter months.
Tags: Palm Oil, India, Edible Oils, Import Duties, Palm Oil Prices, Soyoil, Malaysian Palm Oil
What caused Indian refiners to cancel palm oil contracts?
Indian refiners canceled palm oil contracts mainly due to a recent hike in import duties and rising prices, making it more expensive to buy palm oil.
How does the duty hike affect palm oil prices?
When the government raises import duties, the cost of buying palm oil increases for refiners. This can lead to higher prices in the Market for consumers as well.
What are the consequences of canceling these contracts?
Canceling contracts can create uncertainty in the palm oil Market. It might lead to price fluctuations and affect availability for consumers.
Will consumers pay more for palm oil products now?
Yes, if prices continue to rise due to the canceled contracts and higher duties, consumers may face higher prices for palm oil-based products like cooking oil.
Is there any solution for refiners dealing with this situation?
Refiners might look for alternative sources or types of oil, negotiate better terms with suppliers, or wait for a drop in prices before committing to new contracts.
