India refined palm oil imports to surge on low prices -Ruchi Soya

Date:	21-12-2013
Subject:	India refined palm oil imports to surge on low prices -Ruchi Soya

India Dec 20 (Reuters) - India is likely to import a record 4 million tonnes of refined palm oil in 2013/14 as export taxes in key supplier Indonesia make it cheaper than the crude variety, an executive at India's top edible oil buyer said.

Indonesia, the world's biggest palm oil producer, in November hiked its crude palm oil export tax to 12 percent for December shipments, compared to 6 percent for the refined variant.

India is the world's largest vegetable oils importer, with shipments traditionally dominated by crude oils which are then refined for the domestic market. But cheaper imports of refined palm oil are keeping local refining capacity idle.

"Going by the current trend it seems imports of RBD (refined, bleached and deodorised) palm oil will be nearly half of total palm oil imports (in 2013/14)," Nitesh Shahra, president of the refinery division of Ruchi Soya told Reuters on Friday.

Indonesia has been selling RBD palm oil at a discount of $20 to $25 per tonne over crude palm oil and could offer higher discounts to boost sales, he said.

India imported 8.3 million tonnes of palm oil in the 2012/13 marketing year that ended on Oct. 31, including a record 2.2 million tonnes of RBD palm oil, data compiled by Solvent Extractors' Association of India (SEA) showed.

Shahra said he hoped the Indian government would increase duty on imported refined palm oil "very soon" to arrest the flow.

Indian Food Minister K. V. Thomas earlier this month said the government is considering tweaking import duties.

The south Asian country fills more than half its edible oil demand through imports, consisting mainly of palm oil sourced from Indonesia and Malaysia. It also buys soyoil from Argentina and Brazil, and sunflower oil from Ukraine.

India's total palm oil imports may drop marginally this year due to a correction in prices of sunflower and soyoil, Shahra said.

"The gap between palm and soft oils - sunflower and soyoil - has narrowed ... hence we are expecting an increase in import volumes of soyoil and sunflower oil."

The country's sunflower oil imports in November surged 153 percent from a year ago as the gap between crude sunflower and refined palm oil narrowed to $115 per tonne, compared to $380 at the same time last year, the SEA data showed.

OILSEED OUTPUT

The country's soybean production in 2013/14 could fall by nearly 14 percent from a year ago to 9.5 million tonnes despite a rise in the acreage, Shahra said.

"Considering there has been crop damage, we think current year soybean production would be around 9.5 million tonnes compared to 11 million tonnes last year," he said.

Key soybean producing states Madhya Pradesh and Maharashtra received heavy rainfall in August and September that initially cut yields and later damaged the harvest.

Soybeans are the main summer-sown oilseed crop in the country and so far supplies in the spot market have been lower than last year as farmers are holding back crops in expectation of price rises.

The drop in soybean production would reduce shipments from Asia's biggest soymeal exporter by around 15 percent in 2013/14, he said.

The country's soymeal exports in 2012/13 eased 4.1 percent from the previous year to 3.5 million tonnes, according to industry group Soybean Processors Association of India (SOPA).

The sowing of rapeseed, the biggest contributor of edible oil in the country, is progressing well due to conducive weather. Indian farmers were cultivating rapeseed on 6.65 million hectares as of Dec. 12, compared with 6.36 million hectares a year earlier, farm ministry data showed.

"If weather remains favourable, rapeseed production could rise to 7 million tonnes this year from 6.5 million tonnes last year," he added. (Reporting by Rajendra Jadhav)