Cooking Oil Imports To Rise On Switch To Cotton.

Cooking oil imports by India, the biggest user after China, may rebound next year as record prices prompt farmers to devote more area to cotton than oilseeds, according to Govindlal G. Patel “Farmers earned four times more from cotton than oilseeds last year,” Patel, who’s been trading oils for more than four decades, said in a phone interview from Rajkot. “Oilseeds farmers are not excited over prediction of a normal monsoon this year.”

India meets about 50% of its cooking oils requirement through imports and increased shipments may boost a 36% rally in palm oil prices in the past year in Malaysia.

Cotton prices in India more than doubled in the past year to reach a record, compared with a 16 % gain in soybean prices during the same period.

“Farmers in Gujarat and Maharashtra, the nation’s biggest cotton producers, may plant more area to the crop than to soybeans and peanuts this year,” Patel said.

“Cotton plantings may increase by about 10% in the 2011-2012 season from a year earlier,”Dhiren Sheth, president of the Cotton Association of India, said on May 24.“There will definitely be a shift towards cotton,” said Prasoon Mathur, an analyst at Religare Commodities. “We will have more imports” of edible oils next year, he said.Cotton futures in New York reached a record $2.197 a pound on March 7 on concern that global supplies will fail to meet rising demand led by China, the world’s biggest consumer.

Futures have since slumped 39% on speculation the highest-ever prices may induce farmers to increase production. World output will reach a record 124.72 million bales of 480 pounds each, up from 114.6 million bales in the current marketing year, according to the U.S. Department of Agriculture.

India’s oilseeds output likely increased 21.5% to 30.25 million tonne in the year ended May 31, from 24.9 million tonne a year ago, the farm ministry said on April 6. Increased supplies lowered cooking oil imports this year, according to the Solvent Extractors’ Association.

Overall vegetable oil imports fell 16% to 3.6 million tonne in the six months ended April 30, from 4.29 million tonne a year earlier, according to the processors’ group.

“Purchases in the year ending October 31 may decline as much as 7.6% to 8.5 million tonne, from 9.2 million tonne a year earlier,” said B.V. Mehta.

Source : financialexpress.com