India, the world’s largest cooking oil consumer after China, bought a record quantity last month as traders and refiners increased purchases before a tax rise, boosting domestic stockpiles to an all-time high.
Imports rose to 1.13 million metric tons in January, from 647,693 tons a year earlier, the Solvent Extractors’ Association of India said in a statement today. The figure was in line with a Bloomberg survey, published on Feb. 7, which estimated shipments of 1.15 million tons. Stockpiles, including those at ports and in the pipeline, climbed to 1.75 million tons on Feb. 1, from 1.28 million tons a year earlier, the association said.
India imposed the 2.5 percent tax on imports of unprocessed cooking oils in January, and almost doubled the taxable value of imports, to shield domestic oilseed growers. Palm oil has tumbled 22 percent over the past year in Kuala Lumpur as Indonesia and Malaysia accumulated the biggest ever reserves. B.V. Mehta, the association’s executive director, said India needed to raise import tariffs further to safeguard refiners.
“Malaysia and Indonesia have huge palm oil stock,” Mehta said by phone, urging the government to adopt a 10 percent duty on imports of crude vegetable oils and a 20 percent duty on refined oils. “In order to get rid of this excess stock, these palm-oil-producing countries are pushing aggressively their exports into India.”
Malaysia and Indonesia are the two largest producers of palm oil, which accounted for about 79 percent of last month’s imports by India. The most-consumed cooking oil is used in foods and biofuels.
Futures on the Malaysia Derivatives Exchange, the regional benchmark, tumbled 23 percent last year as the reserves built up, prompting Malaysia to introduce a zero tariff on exports for January and this month. The contract for delivery in April dropped for a second day, losing 0.5 percent to 2,493 ringgit ($807) a ton at 4:32 p.m. in Kuala Lumpur.
Stockpiles in Malaysia, which reached a record 2.63 million tons in December, stood at 2.58 million tons last month, according to data yesterday. Indonesian holdings reached 3.5 million tons last month, according to an earlier Bloomberg survey, the largest figure since the surveys began last May.
“Imports will increase further if the government doesn’t increase the duties immediately,” Mehta said. “The domestic refining industry will be hurt.”