Covid-19: Refiners curtail palm oil imports as lockdowns dent demand

Indian edible oil refiners are curtailing palm oil imports for May and June as most states have imposed curbs on hotels and restaurants to arrest rising coronavirus infections, denting institutional demand, industry officials said.

Lower imports by India, the world's biggest buyer of the edible oil, could limit a rally in benchmark Malaysian palm oil futures, which hit their highest level since 2008 on Thursday.

"Palm oil demand from hotels, restaurants and other institutional buyers has been falling rapidly due to lockdowns," said Govindbhai Patel, chief of trading firm G.G. Patel & Nikhil Research Co.

Almost all states have closed hotels and restaurants for in-dinning as India reported a record 412,262 new COVID-19 cases on Thursday and a record 3,980 daily death toll, with the second wave of infections swamping the health system and spreading from cities into the vast countryside.

Indians, known for their penchant for calorie-laden curry and deep-fried food, consume about 1.9 million tonnes of edible oil a month, with restaurants mainly using palm oil, which accounts for two-thirds of the country's vegetable oil imports.

As local demand has been faltering, refiners are signing fewer import contracts for palm oil shipments in May and June, said Sandeep Bajoria, chief executive officer of Sunvin Group, a vegetable oil broker.

The country was expected to import 850,000 tonnes of palm oil per month in May and June, but now industry officials estimate imports could come down to around 650,000 tonnes.

India imports palm oil mainly from Indonesia and Malaysia, and other oils such as soy and sunflower from Argentina, Brazil, Ukraine and Russia.

Imports of soyoil, which is preferred for cooking in households, are likely to remain stable at around 300,000 tonnes per month, said a Mumbai-based dealer with a global trading firm.

"Sharp rise in edible oil prices has also been reducing demand," the dealer said.