Palm Oil Contracts: You may have to pay more for edible oil this festive season. India’s refineries are rapidly cancelling palm oil contracts. The delivery of this palm oil was to take place between October and December.
India is the world’s largest palm oil importer, importing about 7.50 lakh tonnes of palm oil monthly. Out of this, contracts for about 1 lakh tonnes of palm oil have been cancelled, about 13 percent of the total imports. The effect of the central government increasing import duty is now visible. Palm oil is mixed with edible oils. In such a situation, its shortage can lead to a rise in the price of edible oils.
Malaysia Palm Oil Rates Are Rising Rapidly
According to a Reuters report, all these contracts have been cancelled in the last four days. On Monday, import orders of about 50,000 tonnes were cancelled. This is happening due to the tremendous rise in Malaysian palm oil futures. Malaysian palm oil rates may come down due to India cancelling the order. Soy oil producers may also benefit from this. Many refineries may also turn to soy oil.
Import Tax On Crude and Refined Oil Increased By 20 Percent
India had increased the import tax on crude and refined oil by 20 percent earlier this month. Due to this, the import duty on palm oil has now risen from 5.5 percent to 27.5 percent. The situation has become such that the refinery has more benefits in cancelling the order. The report claims that palm oil sellers are also happy with this. Now, they can make new deals at a higher price. Crude palm oil has currently come down to the rate of $1080 per ton. A month ago, it was $980 to $1000. Apart from Malaysia, India imports palm oil from Indonesia and Thailand.
Import Of Soybean and Sunflower Oil Expected To Increase
Palm oil is used in Asia due to its cheap price. But now, it is the same price as soy oil. In such a situation, companies prefer to buy soy and sunflower oil for winter. India imports soybean and sunflower oil from Argentina, Brazil, Russia, and Ukraine.
