Mumbai (Commoditiescontrol) – Indian palm futures extends sharp losses during previous week as high inventories at Malaysian front and huge palm oil imports at domestic front was constantly adding pressure to the market sentiments. By the end of Week, benchmark April’19 contract, after making a low at INR 520.5, and finally settled at INR 526.3, marking a loss of 3.5% compared to previous week close of INR 545.6 per 10 kg.
The Solvent Extractors’ Association of India has compiled the Import data of Vegetable Oils (edible & non-edible) for the month of February 2019. Import of vegetable oils during February 2019 is reported at 1,242,533 tons compared to 1,157,044 tons in February 2018, consisting 1,182,062 tons of edible oils and 60,471 tons of non-edible oils i.e. up by 7.4%. The overall import of vegetable oils during November 2018 to February 2019 is reported at 4,862,849 tons compared to 4,785,778 tons i.e. up by 1.61%, thanks to higher import duty.
Due to prevailing difference in duty structure, sharp increase in imports of RBD Palmolein was observed, nearly doubled to 241,101 tons in Feb.’19 from 130,459 tons in Dec.’18 i.e. up by 85% at the cost of reduced import of CPO. This is likely to increase in coming months considering the shipments lined up from Malaysia for export of RBD Palmolein to India.
During Nov’18.-Feb.’19, Import of refined oil increased to 647,900 tons from 607,359 tons in same period of last year, however, Imports of crude oil decreased and reported at 3,963,912 tons from 4,048,091 tons during the same period of last year.
Thus, during Nov.’18-Feb.’19, Palm Oil import has marginally increased to 3,070,466 tons from 3,034,514 tons during the same period of last year, however Soft Oils import decreased to 1,541,346 tons from 1,620,936 tons during the same period of last year. The ratio is tilting in favour of palm oil.
However, on monthly basis, total palm oil imports decreased by 7.8% from 815,236 tons imported in Jan’19 to 751,703 imported in Feb’19. Soya oil Feb’19 imports have risen by 18.5% on mom basis to 220,376 vs 185,906 tons observed previous month. Sunflower oil imports were almost stagnant at 200,358 tons vs 200,027 tons during last month.
The stock of edible oils as on 1st March, 2019 at various ports is estimated at 915,000 tons (CPO 470,000 tons, RBD Palmolein 235,000 tons, Degummed Soybean Oil 90,000 tons and Crude Sunflower Oil 120,000 tons to and about 12,80,000 tons in pipelines. Total stock at ports and in pipelines is reported at 2,195,000 tons, increased by 85,000 tons from 2,110,000 tons as on 1st February, 2019. India’s monthly requirement is about 19.0 lakh tons and operate at 30 days stock against which currently holding stock over 21.95 lakh tons equal to 35 days requirements.
At Malaysian front, MPOB balance sheet was release in the starting of month which was strongly bearish due to rise in stocks back to above 3.0 million tons. End-month stocks rose by 1.34% to 3045 million tons, against trade expectation of a fall of 1 to 2%. Stocks been lower since the start of the year after peaking in December at 3.216 million tons. Meanwhile exports fell 21.38% to 1.321 million tons, much deeper than anticipated after shipment to key market China dwindled by 75% and to the E.U down by 22%. Shipment to India rose at the highest pace of 41% to 448,996 tons supported by large purchase of RBD palm olein following reduction in tariffs and jump in palm oil discount to soft oils. Meanwhile, output fell for the fourth consecutive month erasing 11.10% to 1.544 million tons in-line with seasonal slowdown in production. February is the last month of production decline with recovery to start from March.
The European Commission on Wednesday concluded that palm oil should be phased out from transport fuel due to environmental concerns, sparking a backlash from Malaysia, a top producer of the vegetable oil. The European decision is set to hurt the palm oil business at a time of wider concerns about demand.
Looking at the overall sentiments, demand woes from EU side, huge inventories at Malaysian front, and surplus RBD imports in India shall continue to keep overall palm prices on lethargic tone.
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