With Prices on the Rise, India Imports of Palm and Soy Bean Oil Set to Slump.

Cooking oil imports by India, the biggest user after China, may drop this month and in February after a jump in futures to a more than two-year peak made overseas supplies more expensive.

Purchases may decline 16 percent to 1.25 million metric tons in the two months ending Feb. 28, from 1.49 million tons per year earlier, said Govindlal G. Patel, managing partner at GG Patel and Nikhil Research.

The country is the largest buyer of palm oil, which represents almost 80 percent of edible-oil shipments.

Declining imports by India for a fourth month may boost palm oil stockpiles in Malaysia, the world’s second-biggest producer, likely curbing a rally in prices.

Palm oil futures reached 3,905 ringgit ($1,278) on Jan. 4, the highest price since March 2008, and soybean oil rose to 59.10 cents per pound in Chicago on Jan. 3, the highest since August 2008.

“There is disparity in prices and imports are not profitable,” Patel said. Local supplies are also expected to increase as “mustard production is likely to be higher than last year.”

Imported palm and soybean oils are 1,500 rupees to 2,000 rupees ($44) per ton more expensive than local prices, Patel said.

Palm oil stockpiles in Malaysia fell 1.3 percent in December to 1.61 million tons from a month earlier, the Malaysian Palm Oil board said on Jan. 10.

 Palm oil jumped 42 percent last year, a second year of gains, on concern that cooking oil supplies may tighten as dry weather in Argentina curbed soybean crops and rains damaged oil-palm harvests in Indonesia and Malaysia.

India’s winter-sown mustard output may be more than last year’s 5.9 million tons as higher prices encouraged farmers to increase planting and as favorable weather boosts yields, Patel said.

Mustard seed accounts for more than 70 percent of India’s output of winter oilseeds. Its yellow-colored oil is the third-most used cooking oil in India after palm oil and soybean oil.

Winter-sown oilseeds, including mustard and peanuts, were planted in 9.33 million hectares as of Jan. 21, compared with 8.9 million hectares at the same time last year, the farm ministry said.

Imports of crude palm oil by India increased 10 percent to 524,641 tons last month from 476,937 tons per year earlier, while imports of soybean oil dropped 51 percent to 48,725 tons from 100,435 tons, according to the Solvent Extractors’ Association of India.

Source : thejakartaglobe.com