By Rajendra Jadhav

MUMBAI, (Reuters) – India could see a drop in palm oil imports by almost 5% as cheaper soyoil gains more market share. This is due to Indonesian restrictions on palm oil exports, and New Delhi allowing soyoil imports duty-free, dealers stated.

The world’s largest importer of vegetable oils will reduce palm oil imports 19% to 6.7 million tonnes in its next marketing year, which ends on October 31. This is the lowest amount since 2010/11 according to an average forecast by five dealers.

According to them, soyoil imports could increase by 57% and reach a new record of 4.5 Million Tonnes.

The move could cause pressure on Malaysian palm oils prices, and it may raise soyoil exports to records highs. This will also help support U.S. futures price for soyoil. As part of its efforts to control local edible oil prices, India allowed imports duty-free of two million tonnes of sunflower oil and soyoil for the current fiscal year and the next.

Sandeep Bajoria is the chief executive officer of Sunvin Group, an vegetable oil brokerage and consulting firm. “The duty structure makes buying soyoil attractive than purchasing palm oil,” he said.

India offered crude palm oil for $1,775 per ton, which includes cost, insurance, freight and shipping, in June shipment shipments. Crude soybean oil is $1,845.

Bajoria stated that palm oil has a 5.5% import tax. This means the Indian buyer will pay $1,873, an increase of $5,377.

India’s palm-oil imports decreased 15% to 3.23 Million tonnes during the first six months. The reason? Indonesian curbs caused supply problems and forced prices up.

Jakarta has resumed palm oil exports after three weeks of ban. Industry players however said that it was unlikely that the shipments will restart until specific details are available on how much is to be kept back for domestic purposes.

We expected palm oil imports to improve over the second half. But Indonesian policies are not permitting exports increase. “Now buyers have reasons to avoid palm oil,” stated a New Delhi dealer who is part of a global trading group.

India purchases palm oil mostly from Indonesia, Malaysia and Brazil. The majority of soyoil imported from Argentina and Brazil is used to make the oils.

The New Delhi-based dealer stated that it purchases sunflower oil from Russia, Ukraine and Ukraine. However, imports will not rise in the coming months unless there is a change in geopolitical conditions in the Black Sea Region.

Dealers estimate that India will continue to import approximately 1.9 million tonnes more sunflower oil this year than it did last year.