Stagnant oilseed production and rising demand to stem April?s 30% slide
Vegetable oil imports by India, the world?s second-biggest consumer, would rise at least 5% in the year through October because of stagnant domestic oilseed production and growing consumption, according to senior industry executives.
Reversing a nearly 30% slide in April, vegetable oil imports are expected to rise to at least 10.7 million tonne in 2012-13 compared with last year’s record level of 10.2 million tonne, Solvent Extractors? Association (SEA) executive director BV Mehta told FE. Of this, edible oil imports would be at least 10.5 million tonne while non-edible oil purchases will likely hit 200,000 tonne, he added.
In the edible oil segment, palm oil imports will reach at least 8.5 million tonne in 2012-13 while soyoil and sunflower oil may account for one million tonne each, Mehta said. The country?s edible oil stocks as of May 1 fell to 1.8 million tonne from 2.1 million tonne a year before due to the drop in purchases from overseas in April, increasing chances of a rise in imports in the coming months.
Initial trade inputs suggested edible oil imports would bounce back in May, Mehta said, adding, though, that specific data for the month would be available around mid-June. The country meets more than half of its annual edible oil requirement through imports. It buys palm oil mainly from Indonesia and Malaysia, and soyoil mostly from Brazil and Argentina.
“Imports will remain strong, especially from July to October, to cater to demand during the festival season when domestic oil-seed crushing goes through a lean phase,” Mehta said. “Moreover, we are adding 20 million people a year and the country’s consumption is growing at 3.5% annually while domestic production remains stagnant. So I won’t be surprised if imports will hit 14-15 million tonne in five years,” he added.
India’s annual consumption is around 17.5 million tonne, and the country may produce around 7.5 million tonnes of edible oil in 2012-13, he said.
Despite the drop last month, edible oil imports rose nearly 12% during the November-April period to 5.13 million tonne while purchases of non-edible oils, used to make soaps and detergents and for some other industrial purposes, rose 26% to 1,40,742 tonne. Higher purchases by India this year have helped contain a crush in prices in Malaysia and Indonesia. Purchases from Indonesia and Malaysia account for around 80% of India?s edibleoil imports.
“Edible oil prices are expected to remain sideways, and may witness some upward or downward
movement. But, on the whole, I don’t see a major spike in rates globally. South America is harvesting a bumper crop, which would influence the price factor. Imports are going to pick up despite the drop in April,” said Raju Choksi, vice-
president (agro-commodities), Anil Nutrients.
Choksi said domestic supply will likely improve as seeds hoarded by farmers and stockists “would start getting liquidated once monsoon sets in (in early June)”. Palm oil reserves would also swell in key exporters, such as Indonesia and Malaysia, from July-August onwards, he added.
The country expects to reap an oilseed harvest of 30.70 million tonne in the crop year through June, slightly more than last year’s 29.80 million tonne but down 5.5% from the 2010-11 level. This means edible oil imports will grow as the country tries to meet the shortfall.
Palm oil for benchmark August delivery on the Malaysia Derivatives Exchange was up 0.4% at 2,380 ($787) ringgit per tonne on Monday, after scaling a peak of 2,389 ringgit earlier in the session, the highest since April 10. However, prices have generally remained subdued in the last few months in the absence of robust demand prospects.