Palm, Soybean Oil Imports by India to Rise on Demand

Thursday, 15 July 2010
India, the world’s second-biggest vegetable oil consumer after China, may boost imports of palm and soybean oils to meet rising demand during festivals amid a drop in domestic inventories. Purchases in the three months ending Oct. 31 may jump as much as 24 percent to 2.6 million metric tons from a year ago, Govindlal G. Patel, director of Dipak Enterprise, said in a phone interview today.Increased demand from India may push up palm oil prices in Malaysia by 20 percent to 2,800 ringgit a ton by November, said Patel, a vegetable oils trader for more than four decades. The country overtook China as the biggest buyer of the commodity in 2009, helping the edible oil to a 57 percent annual gain.“India will need incremental supplies to meet demand as there’s little available in terms of local supplies,” said Amol Tilak, analyst at Kotak Commodity Services Ltd. “Crushers are not processing oilseeds because of high domestic seed prices.”September-delivery palm oil advanced as much as 0.6 percent to 2,353 ringgit ($734) a ton, reversing an earlier loss.China, India, Pakistan and Indonesia, Asia’s most-populous countries, mark their important festivals in the quarter ending September, with communal meals stoking edible oils consumption. Malaysia’s palm oil inventories fell to a 10-month low in June.Palm oil purchases by India may top 500,000 tons on average each month through October, with soybean oil imports at 200,000 tons to 250,000 tons, Patel said. Sunflower oil shipments may be 50,000 tons each month, he said. China may import about 200,000 tons of soybean oil each month from July to September, the portal Grain.gov.cn said in a report today.Ramadan Demand“Palm oil demand will pick up from now on as soybean’s premium is increasing and buying for Ramadan demand begins,” Patel said. “That will be supportive for prices.”Soybean oil’s premium over palm oil was $112.8 a ton today, higher than the average $89.86 so far this year, according to Bloomberg data. The edible oils are direct substitutes.India’s vegetable oil imports dropped 26 percent to 558,765 tons in May from 751,097 tons a year earlier, the fifth monthly decline, as buyers pared inventories, the Solvent Extractors’ Association of India said June 15.Palm oil makes up almost 80 percent of the nation’s edible oil purchases.Inventories of edible oils at Indian ports have fallen 35 percent to about 550,000 tons at the end of June from about 845,000 tons in February, Patel said. Stocks of soybeans total 3.1 million tons and rapeseed 3.7 million tons, he said.Cooking oil imports in June probably dropped 11 percent to 660,000 tons from 742,000 tons a year earlier, he said.The area sown with soybean may drop to 7.3 percent to 8.9 million hectares this year, as farmers in the states of Madhya Pradesh and Maharashtra, the biggest growers, switch to more profitable crops such as cotton and lentils, Patel said.

Source: Bloomberg