Decline in palm oil price hits importers

Palm oil importers in India seem to be having a tough time. A sharp fall in the prices of palm oil in the international markets have forced many importers to either refrain from taking delivery or defer the delivery of contracted palm oil for a couple of months.

Palm oil prices in the global markets have crashed by about $400 a tonne, holding up the deliveries of 300,000-600,000 tonne to India as a result.

Palm oil importers are incurring heavy losses as prices have nosedived to $800-$900 a tonne last week from $1,250 a tonne two months ago. “Importers and traders are facing problems due to plummeting prices,” B V Mehta, executive director, Solvent Extractors’ Association of India, said.

The prices of palm oil were ruling higher when the deals were carried out but the recent fall has resulted into a loss of Rs 10,000-Rs 11,000 a tonne to Indian importers. “As a result, palm oil contracts have gone awry,” said Pratap Chandan, president, Federation of Gujarat State Edible Oil Merchants’ Association.

According to market estimates, palm oil deals have hit a wall as a fallout of the price volatility. “Deliveries of up to 300,000 tonne of palm oil to India are in a lurch. Similarly, deliveries of 300,000 tonne, 200,000 tonne and 100,000 tonne have gotten stuck in China, Pakistan and Bangladesh, respectively,” said the managing director of a leading edible oil company in Ahmedabad.