Edible oil imports by India, the world?s largest buyer, will likely rebound in the coming months to end the marketing year through October with an 8% rise because of a smaller oilseed harvest and a more stable rupee, top industry executives said
on Thursday.
Edible oil imports may reverse last month?s fall and rise to 8.8 million to 9 million tonne in 2011-12, compared with 8.3 million tonne a year earlier, Solvent Extractors Association (SEA) executive director BV Mehta told FE. Higher edible oil purchases will drive up total vegetable oil imports to around 9.3 million to 9.5 million tonne in 2011-12 from 8.8 million tonne last year, he added.
Edible oil imports fell 6.4% from a year before to 647,693 tonne in January, while purchases of non-edible oils, used to make soaps and detergents and in some other industrial purposes, more than halved to 12,286 tonne. Higher purchases by India this year will support a price rally ? already triggered by huge imports by China and Pakistan ? after a 16% decline in 2011 in key exporter Malaysia and push up domestic retail prices, industry executives said. Purchases from Indonesia and Malaysia account for around 80% of India?s edibleoil imports.
Many edible oil companies have raised prices by around 10% in the past three months to offset the impact of rising prices abroad. ?We will be forced to raise product rates further if global prices continue to soar,? said a senior executive at a major edible oil company, who didn?t want to be named.
?Lower-than-expected rabi crop, an addition of 20 million to our population each year and a 3% increase in per capita consumption will drive overall demand for edible oils in 2011-12,? SEA?s Mehta said. The country will generate an additional demand for 7,50,000 tonne of edible oil this year over 2010-11, but whether the entire demand translates into imports depends on overseas prices, rupee fluctuation and a favourable government policy, Mehta added.
The rupee surged 7.45% in January after depreciating by around 16% last year which had made overseas purchases more expensive. The country usually imports more than half its requirement, which touched 16 million tonne last year. It usually buys palm oil from Indonesia and Malaysia and soyaoil from Brazil and Argentina.
The country expects to reap oilseed harvest of 30.53 million tonne in 2010-11, down 6% from last year, which means imports will grow to tide over a domestic shortfall.
Palm oil for the benchmark May delivery on the Malaysia Derivatives Exchange was trading at 3,252 ringgit ($1,078) per tonne in Kuala Lumpur, after rising 2.4%this year. The price touched 3,294 ringgit?the highest level since June?on Wednesday.
Palm oil will likely rally to more than $1,300 a tonne by the middle of the year as global vegetable-oils supplies tighten, Bloomberg quoted managing director at Aisling Analytics Michael Coleman, on Thursday. ?Absent a demand shock, we think the palm oil price will perform very well over the coming months,? Coleman said at a conference in Singapore.
Industry executives said the peak harvest season for rapeseed in March may improve local supplies and pressure imports for some time, but the overseas purchases will eventually rise due to strong domestic demand and the fall in overall oilseed output.
Edible oil imports fell 6.4% from a year before to 647,693 tonne in January, while purchases of non-edible oils, used to make soaps and detergents and in
some other industrial purposes, more than halved to 12,286 tonne.
The country?s edible oil stocks as of February 1 fell to to 1.3 million tonne from 1.5 million tonne a year before, increasing chances of a rise in imports.