Palm oil prices set a record again last week

India, the world's main importer of vegetable oils, continues to struggle with rising oil prices and reduced duties on their imports to almost zero, but palm oil prices again set a record, rising after oil prices and amid a decline in global production of vegetable oils.

For the fourth time since June, the Indian government has reduced duties on imports of vegetable oils. By the end of March 2022, the basic duty on imports of crude palm, soybean and sunflower oil was reduced from 2.5% to 0%, and the duty on soybean food oil, sunflower food oil, refined bleached deodorized (RBD) palm oil, palm olein RBD, palm stearin RBD and other palm oils other than crude oil was reduced from 32.5% to 17.5%.

This decision was made after on Sunday the country's authorities imposed restrictions on stocks of food oils and oilseeds until the end of March in order to avoid accumulation of stocks and reduce prices. The government also stopped trading mustard oil and oilseeds futures on the National Commodity exchange (NCDEX).

December palm oil futures on the Malaysian stock exchange on Wednesday rose 3.4% to a record 5,021 ringgit/ton or 1 1,208/ton on forecasts for further production cuts, but after India's decision to reduce duties on Thursday and Friday, they fell by the same 3.4% to 4,859 ringgit/ton or 1 1,169/ton.

USDA experts in the October report lowered the forecast of global vegetable oil production in 2021/22 MG by 0.81 million tons to 214.55 million tons, which is 8.09 million tons higher than in 2020/21 MG. In particular, compared to the previous season, the forecast for rapeseed oil production was reduced by 0.4 million tons to 27.31 million tons (29.08 million tons in 2020/21 MG), sunflower – by 0.31 million tons to 21.79 million tons (19.08 million tons), soybean – by 0.17 million tons to 61.69 million tons (59.44 million tons) due to a reduction in rapeseed production in Canada and sunflower in Ukraine and Russia. At the same time, palm oil production was estimated at 76.52 million tons, which is 3.66 million tons higher than in 2020/21 MG.

The estimate of global consumption of vegetable oils was reduced by 0.47 million tons to 212.55 million tons, which is 5.93 million tons higher than in 2020/21 MG. Against the background of a reduction in World Trade, this will lead to an increase in final reserves by 0.23 million tons to the lowest level since 2010/11 MG - 22.95 million tons (24.21 million tons in 2020/21 MG).