Veg oil import to break record this year.

MUMBAI: India, the biggest vegetable oil buyer after China, will import record volumes this year even as the highest-ever soyabean and canola stockpiles fuel speculation that overseas purchases may slow, Godrej International said. Purchases may total 9 million metric tonnes in the year to October 31, Dorab Mistry, a director at Godrej, one of the nation’s top vegetable oil buyers, said on Wednesday. Imports were 8.66 million tonne last year. Soyabean and canola inventories have risen to a record 5.5 million tonne and 7 million tonne, the Solvent Extractor’s Association said April 5.

Sustained imports by India, the largest palm oil buyer, may support prices that jumped 57% last year. Prices slumped 1.5% in the two days after the association’s announcement, reaching a two-month low of 2,498 ringgit ($777) a ton April 6. “Imports will be larger than last year and the oilseeds inventory won’t affect purchases,” Mr Mistry said in a phone interview from Vijayawada, Andhra Pradesh. “The Indian economy is going great guns and when the economy does well demand has shown steady growth.”

Palm oil futures for delivery in June rose 0.8% to 2,539 ringgit a tonne on the Malaysia Derivatives Exchange on Wednesday. The price may reach 3,200 ringgit in the second half as El Nino parches crops in Asia, Mr Mistry said March 9. Mr Mistry’s import estimate compares with the 9.1 million tonne forecast last month by India’s Central Organisation for Oil Industry & Trade, a processors’ group. Purchases may reach 10.1 million tonne, the finance ministry said Feb. 25.

India, also Asia’s biggest supplier of soybean meal, is yet to crush 5 million tonne of soyabeans, 7 million tonne of mustard, 6 million tonne of cottonseed and 2 million tonne of peanuts, the solvent association said on April 5. “The huge inventory is the hallmark of India’s progression from being a subsistence economy to a developed economy,” Mr Mistry said.

“Indians have the ability to hold on to stockpiles and that will ensure imports continue to meet edible oil demand.” India’s oilseed meal exports plunged 41% to 3.22 million tonne in the year ended March 31, a five-year low, as crushers cut output after processing margins narrowed, the extractors’ association said the same day.

Soyabean oil imports may exceed last year’s 990,000 tonne as the premium for soyabean oil over palm oil contracts, Mr Mistry said. Soyabean oil costs $92.66 a tonne more than palm oil, according to Bloomberg data. The premium narrowed to $60.81 on March 31, the lowest since November 7, 2007, reducing the appeal of palm oil, its substitute. India purchases palm oil from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.

Source : The Economic Times