Indian Vegetable Oil Producers’ Association (IVPA) expects vegetable oil import to be at 16.2 million tonnes (mt) during the 2023-24 (October-September) edible oil season against 17.06 mt in 2022-23.

Presenting a paper on ‘Competitiveness of Palm Oil in Indian Markets’ at the UOB Kay Hian Palm Oil Outlook Seminar in Kuala Lumpur on Monday, Sudhakar Desai, Chief Executive Officer of Emami Agrotech Ltd and President of IVPA, said the share of palm oil in total imports is expected to decline from 60 per cent in 2022-23 to 54 per cent owing to very low spread with soft oils.

Stating that India drastically reduced import of soyabean oil in January-March due to a lack of hedging tool, he said it is expected to increase in April-September as many players attempted to lock the negative forward soyabean oil - palm oil spread. If the soya-palm spread continues to be zero for longer , then palm share can drop to 50 per cent. Soya-palm oil spread was more than $400 a tonne a year ago.

3.3% consumption rise

Consumption is expected to increase by 3.3 per cent due to a price fall and a supportive macro environment in India.

He said soft oils are expected to increase consumption share due to tight spreads. Supply chain disruptions such as the Red Sea issue and the expectation of good soyabean and rapeseed crops in India slowed down soyabean oil imports in the last few months. This helped palm oil prices to be resilient.

Desai estimated crude palm oil (CPO) price outlook at $900-940 a tonne (c&f) for April-June and at $840-900 a tonne (c&f) for July-September. He estimated it at $900-960 a tonne (c&f) for April-September for soyabean oil. For sunflower oil, he estimated it at $890-940 a tonne (c&f) for April-June and $900-950 a tonne (c&f) for July-September.

Globally, demand for oilmeals, energy prices, biodiesel policies in various countries, and geopolitical issues are expected to be the key price drivers. With elections at different origins and destinations, government manifestos would keep adding volatility to the markets, he said.

Mustard oil to the rescue

On palm oil production, Desai estimated that Malaysian production is likely to increase by 2.6 per cent to 19 mt and Indonesian output to be flat at 49.6 mt. The combined carry-out stocks of Indonesia and Malaysia are expected to be tighter by at least 300,000 tonnes in 2024, with March-April being the tightest months, especially in Malaysia, he said.

The IVPA president has projected Indian domestic oil availability at 9.23 mt during 2023-24 against 9.07 mt in 2022-23. He attributed this to the good mustard crop with a sizeable carry-out. He said the mustard crop has shown a remarkable 45 per cent surge during the year.

He said the Government might have to take the right steps if the rapeseed prices trade lower than MSP (minimum support price) levels, either by government procurement or by a general increase in import duties to support domestic oilseed crops.

Indian Industries have been recommending an increase in the duty differential of crude vegetable oils and refined vegetable oils to restrict the high volume of refined palm oil, he added.