India scraps its 20% import tax on Soybean oil, comment from our analyst Wilianto
There is alot of talk about potential negative implication to CPO price.
My view is that any move that will make edible oils (soyoil, palm oil, rapeseed, sunflower) is a good news as it encourage consumption.
A lot of people looks at Soy oil as a competitor for CPO. Indeed, both are the same edible oil and a full subtitute. Demand for soy oil = demand for palm oil. If India buy more soy oil, and soy oil price move up, palm oil price will follow or people will turn again to buy more palm oil.
Given that soyoil is still trades at premium to palm oil, I will be less concern that if palm oil trades at premium to soyoil (as the premium might diminish).
The tax issue will selectively impact players that has exposure (benefit) from tax structure in India. If you are a soybean/soy oil importer in India, this is a good news. Otherwise neutral in my view.
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