SEARCH

India keeping off Malaysian crude palm oil?

print   ·  

M.R. Subramani

Chennai, Dec. 14

INDIA has not bought a single tonne of crude palm oil from Malaysia so far this month. This is despite Malaysia's palm oil month-on-month exports rising 9.6 per cent during December 1-10 period to 3.12 lakh tonnes (lt).

The development comes on the heels of a rise in Indian edible oil imports during November with palm oil's share rising to 66 per cent compared with 46 per cent last year. Edible oil imports in November was up at 3.26 lt against 3.16 lt during the year-ago period.

"India has stopped buying crude palm oil from Malaysia and is purchasing it from Indonesia," analysts said. "Indonesia palm oil is cheaper by $5 a tonne," they said.

"India seems to have confined itself to buying only refined, bleached and deodorised (RBD) palm oil from Malaysia," said Mr B.V. Mehta, Executive Director, Solvent Extractors Association of India.

Malaysia also imposes taxes on export of palm oil, though it does exempt a fixed quantity from the levy.

On the other hand, Malaysia has been complaining that the Customs duty levied by India on palm oil products is higher than duty imposed on crude soyabean oil. Earlier this week, the Prime Minister, Dr Manmohan Singh, told a meeting of businessmen in Kuala Lumpur that anomaly existed in soyabean oil duties. He justified the tariff for soyabean oil on the grounds that when the duty was fixed India was not producing much of that oil.

India has bound the duty on crude soyabean oil at 45 per cent as part of its commitment to the World Trade Organisation. Crude palm oil attracts a levy of 80 per cent - an issue that Malaysia and Indonesia have been urging India to address.

The difference in duty structure has also led to rise in import of degummed soyabean oil last season. During 2004-05 oil year (November-October), the imports exceeded 20 lt against eight lt in 2003-04. In the two preceding years, the imports were 11 lt and 14 lt respectively.

Crude palm oil imports, too, increased last season to 23 lt from 20 lt the previous year but India sourced a good part from Indonesia.

According to the Central Agency of Statistics, Indonesia, palm oil exports to India was up 31 per cent to 11.40 lt during January-May this year with crude palm oil making up 7.9 lt. During 2004, India imported 27.6 lt of palm oil from Indonesia, up from 22.7 lt in 2003 and 16.4 lt in 2000.

India accounts for over 30 per cent of Indonesia palm oil exports but things could turn out to be different if Jakarta goes ahead with its plan to strengthen its downstream industries.

Not only India but also Pakistan has also made it clear that it would prefer Indonesian crude palm oil due to the price difference. "We wouldn't mind if the price difference is $1-2 but if it remains $5 and above, we would prefer oil from Indonesia," a Pakistan edible oil representative told a seminar in Mumbai earlier this year.

"Keep aside this, the fact is that India is not in the market for edible oil for two reasons. One, the trade is expecting a revision in the tariff rate that is used to compute customs duties. Two, a good kharif crop and bright prospects of the rabi crop are also making them think twice," analysts said.

The Centre revises the tariff rate for vegetable oils every fortnight but it did not carry out any revision on December 1. However, the trade expects a cut in the rate on Thursday.

"The depreciation of the rupee against the dollar is also keeping them off," they added.

On Wednesday, crude palm oil in Malaysia closed below the psychological level of 1,400 ringgits at 1,397 (Rs 16.90 a kg) for delivery in February. On the other hand, Indonesia crude palm oil was quoted at 3,668 Indonesia rupaiah at kg (Rs 17.35).

In the domestic market, RBD palmolein was down to Rs 377.50 for 10 kg from Rs 379 on Tuesday.

(This article was published in the Business Line print edition dated December 15, 2005)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.

O
P
E
N

close

Recent Article in AGRI-BIZ & COMMODITY

Cautious buyers delay soyameal contracts as prices fall

Importers yet to show any interest as delayed harvest could impact prices »

Comments to: web.businessline@thehindu.co.in. Copyright © 2014, The Hindu Business Line.