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Informist, Friday, Apr. 25, 2025

 

By Pallavi Singhal

 

NEW DELHI – India's palm oil imports are poised for a gradual rise in April, driven by a drop in prices compared to soyoil, according to traders and experts. After a seven-month slump due to high prices, imports are expected to increase by 100,000-200,000 tonnes from 424,599 tonnes in March.

 

The rebound is attributed to a decline in palm oil prices, which had surged at the end of 2024. This was because Indonesia, the largest producer, went through with its increased biodiesel mandate of using 40% of its production for biofuel, reducing export supply. However, since then, a fall in India's imports, which plummeted to a 14-year low in January, coupled with growing stocks in Malaysia and Indonesia, brought prices down.

 

"India's palm oil imports for the Jan-March 2025 quarter were almost 40% lower than the year before, as price-sensitive refiners switched to alternative oils, especially soybean oil," an analyst with a global financial information and analytics centre said. At the beginning of April, India's vegetable oil inventories were at 1.66 million tonnes – the lowest since August 2022, according to data from the Solvent Extractors Association.

 

The current price advantage is expected to drive demand with a rebound in imports likely to replenish depleted stocks and meet seasonal demand, agricultural economist Deepak Pareek said. "Both Indonesia and Malaysia are expected to see good output in the Apr-Jun quarter. Even if oil output from Indonesia falls due to their biofuel mandate, Malaysia is expected to make up for the gap," he said. 

 

As of Thursday, May shipments of crude palm oil including coast and freight were being offered at $1,055 per tonne, compared to $1,090 per tonne for soyoil. The price drop is attributed to a stronger ringgit and weaker crude prices. Crude palm oil prices take cues from crude oil as the former is used in biodiesel mixes. Palm oil prices have also been falling as the Malaysian currency strengthens against the dollar, which makes ringgit-denominated commodities expensive for other currency holders, denting demand.

 

Another factor pushing down prices is a rise in crude palm oil production, which, according to the Malaysian Palm Oil Association, has risen 19.9% on month during Apr. 1-20. "With the import price of crude palm oil at a 7-month low and more importantly, lower than that of soybean and sunflower oils, demand is steadily growing. Early trade data indicates that India's palm oil purchases for April will be around 100,000-200,000 tonnes higher on the month due to bargain buying and to replenish depleting inventories," the analyst said. 

 

According to a statement released on Tuesday, the Malaysian Palm Oil Council expects demand for palm oil from China and India to rise due to restocking ahead of summer and ongoing discounts against soybean oil.

 

Looking ahead, India's imports of the commodity are projected to exceed 500,000 tonnes in May and 600,000 tonnes in June, according to a note from Kedia advisory. Dealers forecast a further rise in demand between July and September, potentially crossing 700,000 tonnes a month as refiners work to rebuild stocks, it added.  End

 

Edited by Avishek Dutta

 

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