Indian Refiners Cancel Palm Oil Orders Due To Price Surge

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India’s palm oil imports, which are primarily from Indonesia and Malaysia, fell 45% in January from a month ago to 275,241 metric tonnes, the lowest in nearly 14 years.
MUMBAI: Indian refiners have cancelled orders for 70,000 metric tonnes of crude palm oil (CPO) scheduled for delivery between March and June, because of a surge in benchmark Malaysian prices and negative refining margins in India, four trade sources said.
Refiners in the world’s largest importer of palm oil cancelled the quantity over the last three days, including 40,000 tonnes today after Malaysian palm oil futures rose more than 11% over four weeks.
The Indian cancellations could limit the rally in Malaysian palm oil prices, although they could also support soyoil prices as some refiners shift to soyoil.
The trade sources spoke on condition of anonymity because they were not authorised to speak to the press.
One Indian buyer, who operates a refinery on the east coast and cancelled palm oil shipments for March delivery, said the combination of negative refining margins in India and high overseas prices meant it made sense to lock in profits by selling palm oil back to suppliers, rather than importing it.
Price-sensitive Asian buyers traditionally rely on palm oil due to its low cost and quick shipping times.
However, the recent price rise has pushed palm oil to a premium over soyoil on the global market.
An influx of soyoil into India between February and March, priced slightly lower than palm oil has prompted some refiners to cancel their palm oil purchases to switch to soyoil, Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage said.
A Mumbai-based dealer with a global trade house said buyers and sellers were mutually agreeing to cancel contracts, with buyers accepting a slightly lower price than the current market rate for cancellations.
CPO is being offered at about US$1,210 per tonne, including cost, insurance and freight (CIF), in India for March delivery, compared to around US$1,120 to US$1,130 a month ago.
India’s palm oil imports, which are primarily from Indonesia and Malaysia, fell 45% in January from a month ago to 275,241 metric tonnes, the lowest in nearly 14 years, as refiners turned to cheaper soyoil.
The soyoil is imported mostly from Argentina and Brazil.
Market speculation that India will raise its import duty on palm oil to support local oilseed farmers has also prompted some refiners to cancel contracts and book profits, said a New Delhi-based dealer with a global trade house. - FMT

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