Festive food addiction set to boost Indian demand for palm oil1 min read . Updated: 08 Oct 2020, 08:16 AM IST
Inbound shipments could rise to as much as 725,000 tons this month
Palm oil purchases by India, the biggest importer, are likely to climb in October from a three-month low as the Hindu festival of lights drives up demand for the world’s most-consumed vegetable oil.
Inbound shipments could rise to as much as 725,000 tons this month as traders and refiners replenish stockpiles to meet rising demand, according to G.G. Patel, managing partner of GGN Research. That compares with an estimated 638,000 tons in September, which was the lowest since June, and 778,568 tons imported in October 2019.
Vegetable oil consumption generally increases during the September to November festive period in the South Asian nation as Hindus celebrate major festivals such as Dussehra and Diwali. Palm oil is commonly used as cooking oil and to make treats such as biryani and jalebi.
A recovery in demand from India may curb the expansion of stockpiles, which have begun to swell in Malaysia, and could underpin prices at a time when a chronic labor shortage hampers production in the second-largest grower. Benchmark futures in Kuala Lumpur have rallied about 47% from May.
“Demand from India and China is recovering and a labor shortage may result in higher palm prices," according to Howie Lee, an economist at OCBC Bank in Singapore. Consumption from these countries is likely to remain intact as their stockpiles are relatively low, he said.
Palm consumption in the Indian food services industry suffered after the government imposed the world’s most stringent stay-at-home rules in March. The curbs are gradually being lifted, and Patel sees total cooking oil imports rising to about 1.2 million tons in October from 1.04 million a month earlier.
Still, purchases may decline in November and December as higher production of monsoon-sown oilseeds curbs imports, while palm oil-use in restaurants and hotels remains lackluster, he said.
Outside China, palm oil demand from food services is relatively weak as countries are still dealing with the virus, according to Oscar Tjakra, senior analyst at Rabobank in Singapore. “Palm oil consumption from low-income households is expected to decrease on the back of rising unemployment."
India likely imported about 317,000 tons of soybean oil in September, compared with 394,735 in August, according to Patel. Sunflower oil imports probably more than halved to 66,000 tons from 158,518 tons, he said.
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