MUMBAI - India's palm oil imports in May plunged 38 percent from a year earlier to their lowest in nearly 4-1/2 years as higher import tax on the tropical oil made it more expensive, a trade body said on Thursday.
Palm oil imports might remain under pressure this month as well, helping rival soft oils such as soyoil and sunflower oils gain market share, industry officials told Reuters.
Lower imports by India, the world's biggest vegetable oil importer, could weigh on Malaysian palm oil futures that were trading near their lowest in 22 months.
India imported 496,478 tonnes of palm oil in May, the lowest since February 2014, the Solvent Extractors' Association of India (SEA) said in a statement https://bit.ly/2JQxNLc.
The country's soyoil imports in May jumped 16.6 percent from a year ago to 396,969 tonnes, while sunflower oil imports more than doubled to 330,985 tonnes.
India's total imports of edible oils in May fell 7 percent from a year ago to 1.25 million tonnes.
"For the first time palm's share in total imports have come down 40 percent," said B. V. Mehta, executive director of the SEA, adding, "This trend will continue in the coming months unless the government changes the duty structure."
In March, India had raised its import tax on crude palm oil to 44 percent from 30 percent and lifted the tax on refined palm oil to 54 percent from 40 percent. But government kept the duty on soyoil and sunflower oil unchanged at 30 percent and 25 percent respectively.
Buyers have been switching to soyoil since it is nearly 20,000 rupees ($295.56) a tonne cheaper than palm oil, said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil importer.
India buys palm oil from Indonesia and Malaysia; and soyoil mainly from Argentina and Brazil, while it purchases sunflower oil from Ukraine.
The country's palm oil imports could drop to 8.5 million tonnes in 2017/18 marketing year ending on Oct. 31, down from 9.3 million tonnes a year ago, said Mehta of SEA.
Refiners were not buying large quantity for August and September shipments anticipating a hike in import tax on soft oils, said a Mumbai-based importer with a global trading firm.
"If government raises duty, then the entire equation will again change in favour of palm oil," the dealer said.