India's palm oil imports set to rise in H2 on festival demand & lower prices: IVPA President

New Delhi, Jul 24 (PTI) India's demand for palm oil is likely to increase in the second half of the year on rising festival demand and lower prices, with total edible oil imports expected to remain at 16 million tonnes during the 2024-25 oil year ending October, Indian Vegetable Oil Producers' Association (IVPA) President Sudhakar Desai said on Thursday.

Of the total imports, about 9 million tonnes should be palm oil, 4.5 million tonnes soyabean oil, and the remaining 3.5 million tonnes sunflower oil during the current year, Desai told reporters on the sidelines of the 4th edition of the IVPA Global Roundtable here.

"Edible oil imports in the last six months have been about 7-8 per cent lower, consequent to high prices and fear of cheaper goods in the FTAs. There was no incentive for holding stock. Due to these reasons, it was low," Desai said.

"But now it is turning. Right now, what's happening is that palm oil, which was actually very expensive, is now becoming cheaper, so palm is back in the import basket," he added.

The recent decrease in duties and the influx of zero-duty imports from Nepal not materialising are also expected to boost imports, Desai said.

India has also widened the duty differential between crude and refined oils, which helps the domestic industry stock up to maintain the supply chain.

"With all these market anomalies going away, imports will be good in the next six months. I expect about 16 million tonnes of total imports in 2024-25, which is more or less similar to last year," he said.

In the last six months, palm oil imports dropped by about 1.2 million tonnes compared to the previous year as it became more expensive than soyabean and sunflower oils.

"People were calling it palm olive oil," Desai quipped.

The demand for palm oil will increase during the festival season from August as Durga Puja will commence early in September, he said.

"So the buying will be peak in August. Normally, it used to be peak in September, but this time it is early August," Desai explained.

He expects consumption to be at least 10 per cent higher than last year during the festive period.

From July, edible oil imports have already shown an uptick with 1.4 million tonnes imported, making up for the earlier shortfall and filling up the distribution pipeline. When palm oil became expensive, the entire HORECA (hotels, restaurants, catering) sector and organised users like Parle, Britannia, and ITC shifted to alternative oils such as rice bran oil.

"When that reverses and they have to start importing palm oil, then the shift happens back," Desai said.

On passing duty cuts to consumers, Desai said the government wants immediate action, which has happened in loose oil. However, there is a lag time of 21-30 days for packaged products.

"Every company has duty-paid stocks on hand and forward sales. When you look at all these things, the normal catch-up time is about 21-30 days," he said. PTI LUX LUX DR DR