New Delhi: India’s edible oil imports in May are expected to have more than doubled, helped by a friendly tax regime, but the continuing surge in purchases has inflated stocks at ports, signalling a slowdown in future months.
The mean of estimates from 11 leading traders across India showed imports rose 131% to 699,319 tonnes from 302,345 tonne in May 2008, with forecasts ranging between 550,000 tonnes and 850,000 tonnes.
Import data for May is expected around 15 June.
Estimates of edible oil imports in the first seven months of the marketing year from November ranged from 4.6 to 4.9 million tonnes, up at least 84% from the 2.5 million tonnes a year ago.
In April, India’s edible oil imports rose 113% to 659,477 tonnes from 309,629 tonnes a year ago, according to the Solvent Extractors’ Association of India.
India does not impose any import tax on crude palm and sunflower oil, and on 24 March, it scrapped a 20% levy on crude soyoil. Refined edible oils attract a 7.5% tax.
Higher imports were caused by traders’ expectation that the newly elected government could raise import taxes in mid-May.
“Any upward duty revision is unlikely before the budget,” said NR Vishwaradhya, chairman of the Central Organization for Oil Industry and Trade, a leading body of local crushers.
Finance minister Pranab Mukherjee will present the new government’s maiden budget in early July, with traders expecting some tinkering on cooking oil import taxes.
Edible oils imports, at 5.6 million tonnes, accounted for 89% of total vegetable oils imports of 6.3 million tonnes in the oil year to October 2008.
Traders estimate palm oil imports in May at 575,454 tonnes, with forecasts from 450,000 tonnes to 687,500 tonnes, double from 287,246 tonnes a year ago.
They expect the tax cut on soyoil to more than double imports to 72,045 tonnes in May from 26,206 tonnes in the previous month.
India’s soyoil imports were at 7,000 tonnes a year ago, when the price of the vegetable oil was boosted by its alternative use for biofuel.
In May, the landed price of crude palm oil ranged from $745-$843 per tonne, while crude soyoil was at $875-$930 per tonne on India’s west coast.
Higher imports led to a stocks build-up at the various ports by end-May, with traders estimating at least 712,000 tonnes, up 50% from the previous month’s stocks of 475,633 tonnes. “High port stocks hint at a demand slowdown in the summer,” said SN Jhunjhunwala, managing director of JVL Agro Industries Ltd. He added the two-month long general polls restricted the movements of the imported consignments.
Traders said India’s crude sunflower imports would be about 51,364 tonnes, with forecasts ranging from 20,000 tonnes to 100,000 tonnes, down from 66,730 tonnes in the previous month and zero imports a year ago.
They forecast about 15,000 tonnes crude rapeseed oil imports during the last month, up 202% from 4,971 tonnes in April.