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Higher Prices Deteriorate Palm Oil Demand In India; Edible Oil To Remain Subdued Until H1 2020

20 Feb 2020 2:19 pm
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Mumbai (Commodities Control) – Despite the country’s edible oil inventories touching its 3 year lows, trade does not anticipate any support to palm oil prices. Higher prices are, in fact, leading to demand distortion in palm oil, notes Atul Chaturvedi, President of Solvent Extractors’ Association (SEA). In an exclusive interview to commoditiescontrol.com, he sees palm oil prices softening in the first half of this year, due to higher palm oil output estimates and a massive crop of mustard expected to hit the producing belts in a month from now.

Chaturvedi admits that palm stocks are indeed at lower levels, but is certainly not worrisome in the face of demand de-growth. He explains that palm oil is a mass consumption product that is expected to be cheaper than other premium oils. Palm oil is facing weaker demand as it has priced itself out as compared with edible oils such as soybean and sunflower oils.

Nearly a Month from now, global palm oil output is expected to go northward. Coupled with the pressure of a bumper mustard crop in India this year, oilseed and edible oil prices have barely a chance to rise until Mid-2020.

In the previous week
Solvent Extractors’ Association (SEA) released its edible oil imports data, according to which palm oil imports during November’19-January’20 dipped by 13.5% to 2,004,567 tonnes as compared with the corresponding period last year.

Higher palm price has reduced the price gap between palm oil and Soy/Sunflower oil, due to which demand of the former continues to decline.

It is estimated that India will likely witness an output of 3.42 Cr Tonnes of oilseed in 2019-20, up 26.7 Lk tonnes from last year. The country produced 3.15 Cr tonnes of oilseed during 2018-19.

It is to be noted that Government did place imports of Refined palm products in restricted category. SEA President said that India, roughly, imports 1.25 Lk tonnes of Palmolein every month, which will now come down to about 50-75,000 Tonnes/Month. Although, the refined palm imports via Nepal is an area of concern, with nearly 30-40,000 Tonnes of Refined Palm landing in the country every month, at zero duty.

So Industry is after all not impressed with Government move, as this not only affects the refiners in the Eastern belt of the country, but will also keep a heavy lid on price gains as well.

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