Palm oil imports by no. 1 buyer seen tumbling to nine-year low

Palm oil purchases by India will probably plummet to the lowest level in nine years as the closing of restaurants and hotels to contain the spread of coronavirus cut demand for the most-consumed vegetable oil.

Imports by the world’s biggest buyer may drop about 21% from a year earlier to 7.4 million tons in the year that began in November, said G.G. Patel, managing partner of GGN Research. That would be the lowest since 2010-11 when the country bought 6.55 million tons, according to data compiled by the Solvent Extractors’ Association of India.

A slump in purchases by India may put further pressure on benchmark palm oil prices, which have tumbled about 35% this year.

Palm oil consumption by restaurants and hotels has suffered as India imposed a three-week long nationwide lockdown in March for its 1.3 billion people, the most far-reaching measure undertaken by any government to curb the spread of the pandemic. Consumption of the oil by households has risen during the restriction period, which has now been broadly extended until May 17, but not enough to offset the slump in demand from the food-service industry.

The tropical oil’s imports likely sank 46% from a year earlier to 385,000 tons in April, Patel said, who has been trading vegetable oils for more than four decades. That compares with 335,308 tons purchased in March.

Downward Trend

Patel’s views were echoed by other traders and processors. India’s palm oil consumption has fallen 40% recently as people have stopped going out to eat, according to Pradeep Chowdhry, managing director of Gemini Edibles and Fats India Pvt.

Palm oil prices have room to fall further and are getting close to the cost of production, Dorab Mistry, director at Godrej International, told Bloomberg Television in an interview on Tuesday. China’s vegetable oil imports are going to shrink this year because of higher crushing of oilseeds locally, he said at a webinar on Friday.

India’s total cooking oil demand will likely drop by 1.0 million-1.1 million tons in 2019-20 from 22.8 million tons a year earlier, while imports may decline about 15% to 12.7 million tons, Patel said. The estimated purchase volume would be the lowest since 2013-14 when the nation bought 11.62 million tons.

Soybean oil imports In April probably totaled 184,000 tons compared, down from 248,851 tons a year earlier and 292,410 tons in March, Patel said. Sunflower oil purchases were estimated to drop to 221,000 tons from 242,462 tons a year earlier and 296,501 tons in March, he said.