Bloomberg News

Cooking-Oil Imports by India Seen Rising for Third Month

May 10, 2012

Cooking-oil imports by India, the world’s biggest consumer after China, may have surged for a third straight month in April as crushing of the domestic crop dropped and local prices increased.

Purchases probably gained 68 percent to 800,000 metric tons from 475,123 tons a year earlier, according to the median estimate of five processors and brokers surveyed by Bloomberg News. Imports of crude and refined palm oil advanced to 515,000 tons from 350,469 tons, the survey showed. The Solvent Extractors’ Association of India will release the data on May 14.

Rising imports may curb the 7.4 percent decline in palm oil prices in Kuala Lumpur from a 13-month high in April, boosting profits for producers including Sime Darby Bhd. (SIME) Futures have dropped on speculation output may increase in Malaysia, the second-largest producer after Indonesia, while a worsening debt crisis in Europe will hurt demand. Indian vegetable-oil imports, 80 percent of which constitute palm oil, climbed 67 percent to 727,706 tons in March, the association said last month.

“The crushing of soybeans has substantially decreased this year, and there was a big margin in import of oils as domestic prices were higher,” said Govindlal G. Patel, a managing director at GG Patel & Nikhil Research Co. “This pace of imports will continue for the next few months and we can see imports of around 800,000 tons per month.”

Price Gains

Palm oil for July advanced 0.7 percent to 3,359 ringgit ($1,095) a ton on the Malaysia Derivatives Exchange at 5:07 p.m. Singapore time. Futures rose to 3,628 ringgit on April 10, the highest price since March 2011 as drought cut soybean output in Brazil and Argentina. Soybean oil, which competes with palm oil for use in food and fuels, increased 1.3 percent to 53.49 cents per pound on the Chicago Board of Trade.

Cooking-oil imports are set to increase 15 percent to as much as 10 million tons this year as a decline in the domestic oilseed harvest fuels demand, Anil Agrawal, executive director of Sanwaria Agro Oils Ltd. (SAO), said on May 3. India bought 8.7 million tons in 2010-2011. Domestic oilseeds output may drop to 30.1 million tons in the year ending June 30 from 32.5 million tons a year earlier, the farm ministry said April 23.

Buyers may boost purchases for June shipment due to the drop in palm oil prices, Ashok Sethia, executive director at Sethia Oils Ltd., said by phone from Kolkata. Palm oil stockpiles in Malaysia fell 5.4 percent to 1.85 million tons in April from a month earlier, the Malaysian Palm Oil Board said in a statement today. Output rose 5.1 percent to 1.27 million tons, while exports were little changed at 1.33 million tons, it said.

Import Duty

“The current decline in prices helps the case for a hike in import taxes,” said Sandeep Bajoria, chief executive officer of Mumbai-based Sunvin Group. “If prices continue to decline, the government might think about it.”

Processors have sought an increase in the import duty to protect domestic refiners from cheap supplies. India should raise the duty on refined palm-oil imports to 16.5 percent from 7.5 percent, the Solvent Extractors’ Association said March 2. The government has resisted such demands, saying that it will fuel inflation, while a weaker rupee has made imports expensive.

“Importers may be discouraged to buy to an extent because of a weak rupee,” said Davish Jain, managing director of Prestige Group. The Indian rupee has lost 5.1 percent against the dollar this quarter in Asia’s worst currency performance.

Soybean-oil imports probably surged to 150,000 tons in April from 31,250 tons a year earlier, while sunflower-oil purchases may have risen to 115,000 tons from 76,400 tons, the Bloomberg survey showed.

Edible-oil stockpiles at Indian ports were about 835,000 tons at the end of April, said Patel of GG Patel & Nikhil.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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