MUMBAI : Indian refiners cancelled 100,000 metric tons of palm oil purchases for delivery between October and December, as New Delhi’s move to raise import duties due to a rally in overseas prices prompted them to book profits, five trade officials told Reuters.
Refiners in the world’s largest importer of palm oil cancelled this quantity over the past four days, including 50,000 tons on Monday, after Malaysian palm oil futures jumped to their highest level in 2-1/2 months.
The Indian cancellations could limit the rally in Malaysian palm oil prices, although they could support soyoil prices as some refiners shift to soyoil.
India earlier this month raised the basic import tax on crude and refined edible oils by 20 per centage points, which effectively increases the total import duty crude palm oil to 27.5 per cent from 5.5 per cent.
“The hefty duty hike and the jump in Malaysian prices caught everyone off guard,” said an Indian buyer who operates a refinery on the east coast and cancelled palm oil shipments for October delivery.
“It created a situation where refiners can make more money by cancelling old purchases instead of refining and selling. Sellers are happy too, since they can now sell at higher prices to new buyers.”
India, on average, imports 750,000 tons of palm oil every month, and the cancellation of 100,000 tons represents about 13.3 per cent of monthly imports.
Crude palm oil (CPO) is currently being offered at about $1,080 a ton, including cost, insurance and freight (CIF), in India for October delivery, compared to around $980 to $1,000 a month ago, giving profit margin of $80 to $100 to buyers.
East Coast-based refiners are washing out on contracts by cancelling them and making a very decent profit, said Aashish Acharya, vice president at Patanjali Foods Ltd, a leading importer of edible oils.
India imports