Mumbai: India, the world’s second biggest vegetable oil buyer, may increase monthly palm oil imports by about 80% after the government cut tariffs on crude palm oil to 40% from 50% on 23 July to boost supply, according to Dorab Mistry, director of Godrej International Ltd.
The country will import as much as 450,000 tonnes of palm oil products a month between July and October, Mistry said in a phone interview from London.
Average monthly imports in the eight months to June have been about 245,000 tonnes, according to the website of the Solvent Extractors’ Association of India.
“The cut in import duties favours crude palm oil and this will lead to a bigger volume of imports,” Mistry, who has traded vegetable oils since 1976, said.
Godrej International, a unit of Mumbai-based Godrej Industries Ltd, is one of India’s biggest buyers of vegetable oils.
Higher shipments to India may raise palm oil prices in Malaysia and soybean oil prices in Chicago.
The price of palm oil reached a record on 6 June driven by increased use of vegetable oils as fuel additives, after crude oil prices tripled in the five years ended 2006.
Palm oil for October delivery on the Malaysia Derivatives Exchange, the benchmark for the commodity, rose as much as 21 ringgit (about Rs248), or 0.8%, to 2,546 ringgit a tonne. The price has risen 62% in the past year as soybean oil advanced 40% in Chicago.
The nation imports palm oil from Indonesia and Malaysia, the world’s biggest producers. The tropical oil is the world’s most-consumed vegetable oil and can be mixed with diesel to stretch fossil fuel supplies.
India, which buys almost half the vegetable oil it consumes from overseas, also cut import tariffs on soybean oil and refined bleached and deodorized palm oils by 5 percentage points.
The nation’s vegetable oil imports, including palm kernel fatty acids and kernel oils, will average as much as 650,000 tonnes a month until October, Mistry said.
Imports of vegetable oil in the year to October would be six million tonnes, down 6.3% from the 6.4 million Godrej had forecast in May.