MUMBAI, Oct 3 (Reuters) - Palm oil buyers in India are asking for discounts on agreed deals and putting off purchases, hoping a slide in global prices will continue and bring cheaper product as a big demand season approaches, dealers and industry officials said.
India is the world's biggest edible oils importer, buying more than half its needs of around 17 million tonnes a year from overseas. It uses mostly palm oil in unrefined form from Malaysia and Indonesia, the world's top producers.
"Importers are making huge losses due to the price fall. They are not signing new contracts. They want to clear imported stocks first, before signing new deals," said an importer based in Indore, in central Madhya Pradesh state.
Refiners and dealers in India are struggling to sell stocks imported in August and September as local buyers are deferring purchases in the hope prices will fall further.
"There is no buyer in the market. Every day sellers are reducing quotes, but buyers are not showing interest," Suvendu Rath, general manager for trading at Sri Murugarajendra Oil Industry, an edible oil refiner in Bangalore, told Reuters.
Malaysian palm oil prices FCPOc3 have plunged nearly a quarter in a month on rising inventories in top producing countries and weak demand.
The benchmark November crude palm oil contract MCAc2 on India's Multi Commodity Exchange has fallen by 27 percent in a month. Compounding the problem has been a rebound in the rupee, which has risen nearly 6 percent, making imports even cheaper.
"Unless buyers see some kind of stability in prices, unless they think this is the bottom, they will not make purchases," Rath said.
SUDDEN PRICE FALL
Imports of palm oil rose 15 percent in August, according to latest data from the Solvent Extractors Association (SEA), as worries grew over a possible shortfall in the U.S. soybean crop because of a severe drought.
"Everyone was contracting higher-than-requirement in August due to concerns over the U.S. soybean crop. That quantity is now landing," said an Indore based edible oil refiner.
"The sudden price fall trapped importers. Now, everyone is thinking twice before making new deals ... imports will fall in November due to this approach."
A few importers, who are expecting palm oil shipments at the end of October, are requesting discounts from sellers, two dealers said.
One said: "In some cases even sellers are cutting prices without request for a discount due to longstanding relationships."
Indonesian and Malaysian sellers were quoting crude palm oil at around $755 per tonne on a free on board (FOB) basis, compared with $945 just a fortnight ago, but still Indian buyers were shying away from new contracts, dealers said.
India's total edible oil imports in 2012/13 are expected to reach a record high of 10 million tonnes, with palm oil cornering 7.8 million tonnes of that, according to a recent Reuters poll, as the world's second most populous country fails to raise output quickly enough to meet demand from a growing middle class.
