India’s Central Board of Excise and Customs announced a surprise drop in Indian import taxes on palm oil on Friday according to news sources, which could fuel even more demand as Malaysia and Indonesia enter their peak production period. Indian import taxes on crude palm oil are due to be dropped from 12.5% to 7.5%, while taxes on refined palm oil are expected to dip from 20% to 15%, in an attempt to boost stocks ahead of peak festival consumption amid a period of strong palm oil prices. Third month palm oil prices have climbed 3% MoM, reaching a fresh 4 month high in the middle of last week.
As the world’s largest consumer of edible oils, Indian consumption has remained the main driver in Malaysian and Indonesian palm oil export demand. Malaysian palm oil exports climbed 27% MoM in August after Indian offtake doubled in size MoM, and sat 33% higher than August 2015 Indian palm oil imports. However, Indian offtake of Malaysian palm oil fell 34% MoM so far in September, now pegged 14% lower than Indian imports for the first 25 days of September last year.