Palm imports seen falling as rupee slumps to record

Inbound shipments fell 8.2% to 550,000 tonnes in July from 599,128 tonnes a year earlier

Palm oil imports by India, the world's largest buyer, probably declined for the first time in three months, as the rupee dropped to a record, prompting importers to scale back purchases.

Inbound shipments fell 8.2 per cent to 550,000 tonnes in July from 599,128 tonnes a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. The Solvent Extractors' Association of India will release the data this week. Total vegetable oil imports, including for industrial use, dropped 2.3 per cent to 850,000 tonnes from 870,328 tonnes, the survey showed. A decline in purchases may boost stockpiles in Malaysia, the largest producer after Indonesia, just as the country starts its high-output cycle, pressuring futures in Kuala Lumpur.

The rupee slumped to an all-time low this month on concern that the current-account deficit will widen from a record in the year ended March. The gap is the biggest risk to the $1.9 trillion economy, according to the central bank.

"The volatility was hurting importers," said Pradip Desai, managing director of broker Palmtrade Services Pvt. "They've been cautious and scaling back purchases. We need more imports but are getting less. If imports do not pick up in August, then availability may be tight in September."

Consumption of oils usually rises during the festival season, which lasts from this month through November. India, the biggest user after China, meets more than half its demand from imports. The country buys palm from Indonesia and Malaysia and soybean oil from the US, Brazil and Argentina.

Indian Stockpiles
Vegetable oil purchases in the eight months through June rose 12 per cent to 7.15 million tonnes, association data show. Cooking oil demand may jump to 23 million tonnes by 2020 from 17.5 million tonnes and imports will grow significantly, says the food ministry. The rupee fell to 61.8050 per dollar on August 6.

Palm for delivery in October climbed 1.8 per cent to 2,282 ringgit ($700) a ton on the Malaysia Derivatives Exchange at 4:57 pm local time. Prices slumped 21 per cent in the past year.

Output in Malaysia probably expanded more slowly than a year earlier in July, keeping inventories at the lowest in more than two years, a Bloomberg survey showed on August 6. Production rose 10 per cent to 1.56 million tonnes in July from a month earlier, while reserves held at 1.65 million tonnes, it showed.

Inventories in India, including those at ports and in the pipeline, were probably 2 million tonnes at the start of August from 2.06 million tonnes in July, said Sandeep Bajoria, chief executive officer of Mumbai-based broker Sunvin Group.

"With the festival season starting soon these stocks should come down," he said. "Consumers have been mostly protected from the impact of the depreciating rupee as overseas prices are weak."

Crude soybean oil imports probably jumped to 230,000 tonnes in July from 156,720 tonnes a year earlier, while sunflower oil purchases may have declined to 60,000 tonnes from 80,101 tonnes, the survey showed.