Indian refiners switch to soyoil as palm prices rally

MUMBAI: The share of palm oil in India’s growing edible oil imports is likely to plunge to a record low this marketing year as a rally in prices slashes its discount over rival soyoil.

That shift in the world’s top palm oil importer could drag on benchmark prices for palm oil that have surged around a third in the last 12 months, while bolstering markets for soyoil.

Edible oils are a common ingredient in Indian cuisine, used in everything from curries to samosas, with soyoil seen as more healthy than palm.

“Palm oil discounts are consistently reducing over soyoil. At the current price level, Indian refiners are inclined to switch to soyoil,” said Govindbhai Patel, managing director at edible oil trading firm GG Patel & Nihil Research Co.

Palm’s discount to soyoil has more than halved to US$ 70 per tonne, from US$ 171 in August 2015, according to data from Mumbai-based trade body the Solvent Extractors Association of India (SEA).

India’s overall edible oil imports are expected to rise 1.4 per cent in the 2015/2016 marketing year that ends in October to 14.6 million tonnes due to rising consumption, Patel said, but palm imports will drop 12 per cent to 8.4 million tonnes.

That will crimp palm’s share of total edible oil imports to 57 per cent - the lowest since India eased restrictions on such imports in the early 1990s. Palm oil’s share of India’s edible oil imports stood at 66 per cent last year, down from 86 per cent in 2007/2008.

India’s monthly palm oil imports fell to 570,051 tonnes in July, the lowest since February 2015. And soyoil imports have jumped as palm purchases have faded.