(Bloomberg) – Palm oil imports by India, the world’s biggest buyer, slumped for the first time in four years as record global cooking oil supplies narrowed its discount to soybean and sunflower oils.
Shipments declined 4.1 percent to 7.96 million metric tons in the year ended Oct. 31, the first drop since 2009-2010, the Solvent Extractors’ Association of India said in a statement today. Total vegetable oil imports, including industrial oils, jumped 12 percent to a record 11.8 million tons as purchases of soybean and sunflower oils climbed to the highest ever, it said.
Palm oil, used in everything from noodle to soaps, lost market share in India as its discount to soybean oil narrowed to an average $84 a ton this year from $244 in 2013, data compiled by Bloomberg show. Palm entered a bull market last week after Indonesia and Malaysia, the largest producers, scrapped export taxes to boost demand and cut reserves.
“The gap between soft oils such as soybean and palm oil was very narrow during the year and that eroded the competitiveness of palm,” said Sandeep Bajoria, chief executive officer of Mumbai-based broker Sunvin Group. “With Malaysia and Indonesia pushing their exports through zero duty, India’s purchases may rise by almost 1 million tons this year.”
Soybean oil imports surged 79 percent to 1.95 million tons, while sunflower oil imports jumped 55 percent to 1.51 million tons, the association said.
Bull Market
Palm futures traded 1.5 percent lower at 2,226 ringgit ($667) a ton on the Bursa Malaysia Derivatives today. Prices settled at 2,336 ringgit on Nov. 3, exceeding an increase of 20 percent from the 1,929 ringgit close on Aug. 29 needed to meet the common definition of a bull market. Soybean oil slumped to 31.52 cents a pound on Sept. 10, the lowest since March 2009.
India’s vegetable oil imports in October rose 22 percent to 1.25 million tons, including 855,516 tons of palm, 218,599 tons of soybean oil and 101,400 tons of sunflower oil, the association said. Shipments rose due to stagnant oilseed crop, rising demand, population growth and lower prices, it said.
The South Asian nation will buy record amounts in 2014-2015 after a slow start to the local oilseed crushing season, helping palm futures to exceed 2,500 ringgit, according to Dorab Mistry, director at Godrej International Ltd. Shipments may reach 12.3 million tons in the year from Nov. 1, with palm purchases rising 13 percent to 8.75 million tons, Mistry said on Nov. 6.
India imports more than 50 percent of its cooking oil demand, shipping palm from Indonesia and Malaysia, the top producers, and soybean oil from the U.S., Brazil and Argentina.
