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India's Jan palm oil imports drop as refiners switch to soft oils

A farmer prepares to unload oil palm bunches from a tractor trolley in a mill at Dwaraka Tirumala

By Rajendra Jadhav

MUMBAI (Reuters) - India's palm oil imports in January plunged 29% from a year earlier, as a rally in tropical oil prices to a record high prompted refiners to increase buying of rival soyoil and sunflower oil, a leading trade body said on Monday.

Lower purchases by the world's top edible oil importer could cap the rally in palm prices, but may support U.S. soyoil futures and sunflower oil from the Black Sea region.

India imported 553,084 tonnes of palm oil in January, compared with 780,741 tonnes a year earlier and 565,943 tonnes in December 2021, the Mumbai-based Solvent Extractors' Association of India (SEA) said in a statement.

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The country's imports of soyoil surged 341% from a year ago to 391,158 tonnes last month, while sunflower oil purchases jumped 50% to 307,684 tonnes, the trade body said.

In January, crude palm oil (CPO) was being offered at around $1,510 a tonne, including cost, insurance and freight (CIF), in India, compared with $1,506 for crude soybean oil and $1,475 for crude sunflower oil, the SEA said.

A year ago, CPO was trading at a $74 per-tonne discount to soyoil and $272 discount to sunflower oil.

"Even in February, combined imports of soyoil and sunflower oil are likely to be more than palm oil," said a Mumbai-based dealer with a global trading firm.

Palm oil imports could recover a bit from March as the government has cut the Agriculture Infrastructure and Development Cess (AIDC) on CPO imports to 5% from 7.5%, the dealer said.

Mindful of an electorate that is highly sensitive to food price inflation, the government in the past few months has tried to rein in domestic prices by reducing import taxes, imposing stockpile limits and suspending futures trading in edible oils and oilseeds.

India imports palm oil mainly from top producers Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.

(Reporting by Rajendra Jadhav; Editing by Subhranshu Sahu)