India Cooking Oil Imports May Slump as Palm Oil Prices Surge, Patel Says.

Cooking oil imports by India, the biggest consumer after China, may tumble this month, potentially driving prices lower, after a jump in palm oil futures to a 26- month high made purchases unprofitable for traders.

Imports may drop 36 percent to 600,000 metric tons in October, compared with 942,257 tons in September, Govindlal G. Patel, managing partner at GG Patel & Nikhil Research Co., said in an interview. India is the world’s biggest buyer of palm oil, which accounts for about 80 percent of its edible-oil purchases.

“People are not buying, as global prices are high and there is disparity,” Patel, 71, who has been trading oilseeds and vegetable oils for more than four decades, said by phone yesterday. “Global prices are higher than local prices.”

Declining imports by India may boost stockpiles in Malaysia amid an expected increase in output, potentially snapping a rally in prices. Palm oil futures traded on the Malaysia Derivatives Exchange reached a 26-month high last week after the U.S. Department of Agriculture said the nation’s soybean output may be lower than earlier forecast. Palm and soybean oils are direct substitutes for use in food and biofuels.

India’s palm oil imports from Malaysia, the second-biggest producer, dropped 21 percent in the first 15 days of this month, compared with the same period in September, according to independent surveyor Societe Generale de Surveillance.

The December-delivery imported crude palm oil price in India is about 450 rupees ($10.14) per 10 kilograms, compared with the local price of 429 rupees, said Chowda Reddy, an analyst at JRG Wealth Management Ltd., which advises traders. Imported crude soybean oil is 496 rupees per 10 kilograms, compared with 484 rupees locally, he said.

Prices to ‘Soften’

“The domestic price of soybeans will soften in the next month” as harvesting of the monsoon-sown crop begins this month, Reddy said yesterday.

Palm oil output in Malaysia is expected to rise this month after production dropped in September as religious holidays cut the number of working days.

Vegetable oil stockpiles in India, which overtook China last year the world’s biggest palm oil buyer, were at 1.5 million tons on Oct. 1, from 1.38 million tons a month earlier, as traders boosted inventory to meet festival demand, the Solvent Extractors’ Association of India said on Oct. 15. The peak season for the country’s edible oils consumption began in August with Ramadan and will conclude with the Diwali holiday on Nov. 5.

Imports of crude palm oil by India surged to 588,618 tons last month from 544,091 tons a year earlier, while imports of soybean oil climbed to 189,930 tons from 110,205 tons as its premium over palm oil narrowed, the association said.

Source : bloomberg.com