Global Price Slump May Drive Up Vegetable Oil Import: SEA.

New Delhi: A slump in global commodity prices due to an economic turmoil in major economies will boost India’s vegetable oil imports in the next oil year starting November as local consumption is growing, trade and industry executives said on Wednesday.

India, the world’s second-largest vegetable oils buyer, may import 6,00,000 tonne to 7,00,000 tonne more in 2011-12 to cater for growing demand if local output remains flat, BV Mehta, the executive director of Mumbai-based Solvent Extractors Association (SEA), told FE. A rise in local oilseeds output in 2010-11 is expected to drag down vegetable oil imports to 8.50 million tonne, with a margin error of 200,000 tonne, from 9.24 million tonne in 2009-10, Mehta added.

“Local consumption is growing because we are adding around 20 million to our population every year. Moreover, if global prices remain subdued due to the current economic crisis, India's vegetable oil imports will get an impetus,” Mehta said.

The country reaped a record oilseed harvest of 31.1 million tonne in 2010-11 and the government hopes the production level will be maintained in 2011-12 as well, which means imports will grow in the case of an increase in demand.

Crude palm oil on Malaysia’s derivative exchange fell Tuesday as investors cashed out amid deepening concerns about the economic crisis following the cut of top-notch credit rating of the US by Standard and Poor’s. Crude palm oil futures for the October delivery on the Bursa Malaysia Derivatives ended down 1.1% at MYR3,002 a tonne on Tuesday. Palm oil accounts for around 80% of the country's vegetable oil imports.

Summer oilseed planting has risen around 4% until Aug. 16 to 16.58 million hectares from a year earlier, according to the official data. However, industry executives say the advantage of a higher acreage may be offset by the higher planting of low-yield edible oilseed.

“The acreage of kharif soya crop is expected to rise in 2011-12 and that of groundnut may fall. But no precise forecast of the oilseed output can be given now as rabi sowing is yet to take place,” said noted edible oil expert G G Patel. Importantly, groundnut has a 40% oil content, while soybean has just 18%, he added.

After a slump in the first six months of the 2010-11 oil year, the country’s vegetable oil imports started rising since May as domestic supplies have thinned. Still, total vegetable oil imports between November and July declined by 5.3% to 6.04 million tonne, according to the data by the Solvent Extractors Association

Source : financialexpress.com