India ups palm oil buying as tax cut spurs restocking

India is increasing its purchases of palm oil following a recent tax reduction, according to a recent report. The government cut import duties on edible oils, prompting palm oil refiners to restock depleted inventories ahead of festival season. Aashish Acharya, vice president at Patanjali Foods Ltd, stated that over 200,000 tons of crude palm oil were bought in the past week.

This buying spree could provide a boost to the global palm market, as supplies in top producers Indonesia and Malaysia remain ample. Indian inventories are running low, adding urgency to purchases to prepare for Diwali and the subsequent wedding season. India typically imports 500,000 to 650,000 tons of palm oil monthly, and a sustained restocking push could quickly absorb excess supply.

The government recently halved the levy on imports of crude palm and soybean oils to 5%, aiming to reduce food costs. Indian purchases could accelerate if prices fall further, potentially rising to as much as 750,000 tons a month during peak demand. Consumption usually increases during the festival season, starting in September and running through Diwali in November.

Palm oil has become the cheapest edible oil due to robust production and weak exports, which have fueled concerns about swelling inventories. Indian traders are buying palm oil at every price correction, as the duty cut has improved its appeal.