Ashok B Sharma

New Delhi, June 3: INDIA’S import of palm oil in the current year is likely to rise to 3.85 million tonne (m tn) as against 3.55 million tonne in the previous year, despite the high tariff barriers imposed, said a study made on behalf of Comex Malaysia.

The total imports of all types of edible oils by India is likely to be 5.6 million tonne.

The study conducted by Darab E Mistry also stated that out of the likely imports of 3.85 million tonne of palm oil by India in total, RBD palmolien will consist of 2,100 million tonne, crude palm oil (CPO) will be 1,500 million tonne and non-edible palm oil will be 250 million tonne. Besides, the imports of crude soyabean oil will be 1,100 million tonne, sunflower seed oil will be 400 million tonne, refined soyabean oil and lauric oil will be 100 million tonne each and other edible oils will be 50 million tonne.

Mr Mistry foresees a surplus soya crop in South America and by June the world markets will be flooded with soyabean oil. In this situation, palm oil should maintain its attractive discount to soyabean oil, in view of the tight freight market and buoyancy in freight rates for palm oil. Sea freight from South America to India is almost the same as from Malaysia to India, he says.

Estimating that palm output in Malaysia will remain in a high cycle this year, he says that CPO production will hit a record of 12 million tonne. Indonesian palm oil output is estimated at eight million tonne. The additional two million tonne will have to be absorbed. The demand from the Indian sub-continent is likely to be 500,000 mt and palm oil will “need to capture additional markets with its favourite weapon of price”.

Mr Mistry, however, expects that that global prices of RBD palmolien in the next few months will be in the range of $200 to $250 per tonne on FoB. He says that if Malaysian CPO output in July exceeds one million tonne, the prices will be bearish and if it undershoots this target, the prices will be bullish. Prices in the second half of the year will reflect CPO output and stocks as well as South American planting intentions.

Mr Mistry states that the current subsidy and price support operation to growers by the Malaysian government is not a solution by itself. It will ensure that palm does not buy new demand. It will enable soyabean to hang on to its markets and that another massive oilseed crop will be planted in South America. It will also give palm producers in other countries an open field and a free ride.

He says that high prices will also encourage larger oilseed output in consuming countries. With the current level of import duties every dollar on price of RBD palmolien costs two dollars to Indian consumers. He says that if the “Golden Hello Scheme” is implemented in India for switching 2.5 million hectare (ha) from cereals to oilseeds through a mechanism of financial incentives and levies, then Indian imports will fall by 800,000 tonne.

In the year 2000, India remained the largest importer of Malaysian RBD palm oil, absorbing 2.03 million tonne. But this was lower by 12.5 per cent compared to imports in 1999 due to increased duty on refined palmolien and preferential imports of crude palm oil. Export competition from Indonesia was another factor.