Palm oil imports fall to lowest in 5 months

India's palm oil imports in January fell to their lowest since September, data from the Solvent Extractors' Association of India (SEA) showed on Friday, largely due to a seasonal drop in demand for the tropical oil that solidifies in winter.

Lower purchases by the world's top buyer could put pressure on palm oil prices and dent a recovery from a more than 35 per cent slump seen over the two years ended 2012. The benchmark Malaysian rates rose a slight 9 percent last year.

Palm oil imports in January dropped 35.7 percent to 555,446 tonnes on month, the data showed, in line with expectations.

"Imports dropped in the peak winter month as the tropical oil has a low freezing point with higher processing costs," said Sandeep Bajoria, chief executive of Mumbai-based Sunvin Group.

Imports of crude palm oil fell by 51 per cent from a month ago to 337,418 tonnes, but imports of the refined variant rose 27 per cent to 208,231 tonnes.

The cost of importing refined palm oil was lower than that for the crude variant due to top producer Indonesia's duty structure, with the average price of refined palmolein at $830 per tonne versus $837 for crude palm oil, the SEA data showed.

Traders said imports of refined palm oil rose as most of the volumes were booked in early January, before India hiked its import duty on the product.

They also said a year ago, cheaper prices kept palm oil imports relatively higher at 893,313 tonnes.

Concerns of a duty hike and poor local supplies had pushed India's vegetable oil imports to an 11-month high in December.

On January 9, India raised the duty on refined palm oil to protect the interests of local oilseeds farmers and refiners against cheaper imports from southeast Asian producing nations.

India buys palm oil from Indonesia and Malaysia, which together account for almost all of the world's palm oil supply.

Palm oil makes up 80 per cent of India's total vegetable oil imports. The country meets around 60 per cent of its annual vegetable oil needs, which average 17 million to 18 million tonnes, through overseas purchases.

India's January soyoil imports rose as demand firmed during the wedding season and local supplies dwindled due to damage to the soybean crop from rains at the start of harvest in October.

Soybeans are crushed to produce edible oils and soymeal.

Import of soyoil rose more than three times from a month ago to 174,236 tonnes in January, the data showed. India imports small quantities of soyoil from South America.