Palm Oil Contracts: You may have to pay higher prices for edible oil this festive season. India’s refineries are rapidly cancelling palm oil contracts. The delivery of this palm oil was to take place between October and December. India is the world’s largest palm oil importer. India imports about 7.50 lakh tonnes of palm oil every month. Out of this, contracts for about 1 lakh tonnes of palm oil have been cancelled so far, which is about 13 percent of the total imports. The effect of increasing import duty by the central government is now visible. Palm oil is mixed in edible oils. In such a situation, its shortage may lead to a rise in the prices of edible oils.
Malaysia palm oil rates are rising rapidly
According to a Reuters report, all these contracts have been cancelled in the last 4 days. On Monday, import orders of about 50 thousand tonnes have been cancelled. This is happening due to the tremendous rise in Malaysian palm oil futures. The cancellation of orders by India may bring down the rates of Malaysian palm oil. Also, soy oil producers may also benefit from this. Many refineries may also turn to soy oil.
Import tax on crude and refined oil increased by 20 percent
India had increased the import tax on crude and refined oil by 20 percent earlier this month. Due to this, the import duty on palm oil has now increased from 5.5 percent to 27.5 percent. Now the situation has become such that the refinery has more profit in cancelling the order. The report claims that the sellers of palm oil are also happy with this. Now they can make new deals at a higher price. Crude palm oil has currently come down to the rate of $ 1080 per ton. Till a month ago it was at $ 980 to $ 1000. Apart from Malaysia, India imports palm oil from Indonesia and Thailand.
Import of soybean and sunflower oil is expected to increase
Palm oil is used in Asia due to its cheap price. But now its price has come at par with soya oil. In such a situation, companies would prefer to buy soya oil and sunflower oil for winters. India imports soyabean and sunflower oil from Argentina, Brazil, Russia and Ukraine.
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