MUMBAI (Jan 25): India's palm oil imports could drop 29% in the March quarter from the previous quarter as record inventories and weak demand prompt refiners to curtail purchases and focus on liquidating stocks, five dealers told Reuters.

Lower purchases by the world's biggest buyer of palm oil could weigh on Malaysian palm oil futures, which have nearly halved from their all time peak hit in 2022.

Palm oil imports in the March quarter could fall to 2.2 million tonnes, down from 3.1 million tonnes in December quarter, the average estimate from five trading firms showed.

"Indian refiners aggressively bought palm oil in December quarter, but now imports would slow down as they would first try to clear inventories," said Anilkumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil brokerage.

Vegetable oil stocks in India have jumped to a record 3.2 million tonnes at the start of January from 1.7 million tonnes a year ago, estimates trade body Solvent Extractors' Association of India.

Monthly palm oil imports could be 700,000 to 800,000 tonnes in the March quarter and unlikely to cross one million tonnes like in the last quarter, said Rajesh Patel, managing partner at GGN Research.

Refiners could increase buying of soyoil and sunflower oil in the March quarter as New Delhi has allowed duty free imports, Patel said.

India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.

Palm oil's discount to rival soyoil has been narrowing and made it less lucrative for buyers, said a New Delhi-based dealer with a global trade house.

The discount jumped to as much as US$500 (RM2,133) per tonne in the December quarter, but now the discount has come down to around US$270, dealers said.

Demand for palm oil has also been affected by the winter season, said a Mumbai-based dealer.

India's palm oil demand usually moderates during winter months as the tropical oil solidifies at lower temperatures.