India's palm oil imports in February plunged to the lowest in nearly three years, data from the Solvent Extractors' Association (SEA) showed, as higher prices and hopes local supplies of rival rapeseed oil would improve kept buyers away. The second straight monthly drop in overseas purchases was also partly due to an export duty structure at top producer Indonesia that promotes sale of refined palm oil products.
Weak purchases by the world's top buyer could cap a recent rally in benchmark palm oil prices, which surged to an 18-month high this week amid crop-damaging dry weather in top producers Indonesia and Malaysia. India's palm oil imports in February dropped 27 percent from a month ago to 403,685 tonnes, the data showed on Friday, coming in at the lower end of traders' expectations of 400,000 to 550,000 tonnes.
This was also the weakest since April 2011 when the country had shipped in 350,469 tonnes. "Expectation of a higher rapeseed crop largely kept palm oil importers on the sidelines," SEA's executive director B.V. Mehta said, adding that Indonesia's export duty also hurt purchases. India's imports of crude palm oil fell 20.4 percent from a month ago to 268,686 tonnes in February, while purchases of the refined variant dropped 40 percent to 125,142 tonnes.
Traders said palm oil imports were around $40-$45 per tonne costlier in February than the previous month. The average import price of refined palmolein was at $870 per tonne versus $882 for crude palm oil, the SEA data showed. A year ago, cheaper prices kept palm oil imports higher at 805,362 tonnes, including 669,678 tonnes of crude palm oil. Palm oil accounts for 80 percent of India's total vegetable oil imports that average 17 million to 18 million tonnes. The country meets around 60 percent of its annual vegetable oil needs through overseas purchases.
India gets palm oil from Indonesia and Malaysia. In February, India's soyaoil imports dropped 45 percent to 96,420 tonnes from a month ago, the data showed. India imports small quantities of soyaoil from South America. Expectations of a bigger rapeseed harvest kept the monthly cooking oil imports down. Harvest of rapeseed, India's main winter season oilseed crop which is crushed to produce rapeseed oil, starts from February and peaks in March.
India's rapeseed harvest in 2014 could rise 7.8 percent to 7.23 million tonnes, according to estimates of the Central Organisation for Oil Industry and Trade (COOIT). The latest harvest estimate for the highest oil-yielding crop is less than initial trade expectations of 7.6 million tonnes as rains and hailstorm have damaged the crop in parts of western India. COOIT expects India's vegetable oil imports to rise as much as 5 percent to 11.2 million tonnes in the year to October.
