RTRS - India may raise palm oil import duties again this yr -analyst
Posted by Labels: Trader's highlightKUALA LUMPUR, Jan 30 (Reuters) - India may raise import duties on edible oils such as palm oil and soyoil again this year, with the government looking to protect domestic oilseed farmers as inflation slows, leading industry analyst Dorab Mistry said.
India, the world's No.1 edible oil buyer, this month hiked import duties on crude imports to 2.5 percent from zero and lifted a six year freeze on the taxable value of cargoes to curb cheap imports from top palm suppliers Indonesia and Malaysia.
While India left refined edible oil import duties unchanged, the policy move on crude showed it was still wary on inflation that slowed last month to its lowest in three years, said Mistry, who closely tracks the country's oilseed sector.
"I expect the next step to be announced in the budget at the end of February," Mistry, head of trading with India's leading speciality chemicals group, Godrej Industries, told Reuters in an interview on Wednesday.
"The industry has requested import duty at 10 percent on unrefined oils and 17.5 percent on refined oils and I believe we shall get that level by end of March 2013 at the latest," he said.
New Delhi raising import taxes counters Malaysia's move to lower its crude export duty to reduce record palm oil stocks and helps to raise India's falling domestic oilseed price.
As a rule of thumb, India's soybean and rapeseed farmers need a minimum price of 35,000-38,000 rupees ($650-$710) a tonne to continue planting these crops, Mistry said. Current prices for soybeans are hovering at 32,400 rupees a tonne, according to industry data.
This spurs farmers to switch to other more lucrative crops such as corn, pulses and vegetables, setting the stage for India's government to raise import duties on crude oils to 20 percent and refined oils to 27.5 percent by August, Mistry added.
"Remember from August we shall have a torrent of sunflower oil available for export from Russia and Ukraine, and this oil will go to a discount to soya oil and will pressure prices all over the vegetable oil complex."
VERY HIGH PALM OIL STOCKS
India imports about half the 16 million to 17 million tonnes of edible oils it consumes every year, mostly palm oil from Indonesia and Malaysia.
Mistry said that any further policy move by India would impact these two Southeast Asian countries where palm oil prices were very high at 2,400-2,500 ringgit ($790-$820) even though Malaysian stocks hit a record 2.6 million tonnes in December.
Mistry said these prices may not prompt much expansion in demand for the edible oil as palm oil output grows and competing soyoil supply jumps from May onwards.
"I do not expect Malaysian stocks to decline below 2 million tonnes in the foreseeable future," he said.
Malaysia's January palm oil stocks will be almost unchanged from December, with declines expected in February to April. By May, stocks will build again, Mistry said.
Indonesia, which does not publish stocks figures, has current inventories of about 5 million tonnes.
"Of these about 1 tonne is systemic stocks which are permanently required in view of the extended and poor logistics in Indonesia," Mistry said.
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