Indian refiners have cancelled 100,000 metric tons of palm oil purchases scheduled for delivery between October and December, following New Delhi’s decision to raise import duties and a surge in global prices. The cancellations, confirmed by multiple trade officials, come as Malaysian palm oil futures hit their highest levels in over two months, prompting refiners to book profits.
The move is expected to impact palm oil prices globally, particularly in Malaysia, while potentially increasing demand for alternative oils like soy oil. India, the world’s largest importer of palm oil, typically imports around 750,000 tons per month, making this cancellation about 13.3% of its monthly intake.
Earlier this month, India raised the basic import duty on crude and refined edible oils by 20 percentage points, increasing the total duty on crude palm oil to 27.5%, up from 5.5%. The sudden hike, coupled with rising Malaysian prices, caught refiners off guard. “Refiners can now make more profit by cancelling old contracts and selling at higher prices,” said one east coast-based refiner who cancelled shipments for October delivery.
Aashish Acharya, Vice President at Patanjali Foods Ltd., noted that refiners on India’s east coast have been cancelling contracts to take advantage of higher profit margins. Crude palm oil is currently being offered at around $1,080 per ton for October delivery in India, a significant increase from $980-$1,000 just a month ago.
Sandeep Bajoria, CEO of Sunvin Group, said refiners are uncertain about demand for the December quarter due to high prices and are unsure whether these price levels will hold, prompting them to cancel contracts.
Palm oil, traditionally favoured by price-sensitive buyers in Asia, is now trading at a premium over soy oil. As prices rise, Indian refiners are expected to shift towards cheaper alternatives like soy oil and sunflower oil, particularly as demand for palm oil typically dips during the winter months when the tropical oil solidifies.
India imports most of its palm oil from Indonesia, Malaysia, and Thailand, while sourcing soybean and sunflower oils from Argentina, Brazil, Russia, and Ukraine.