India, the biggest vegetable oils buyer after China, may import record volumes for a second year after a drought in almost half the country damaged oilseed crops, a processors’ group said.
Purchases in the year starting Nov. 1 may rise as much as 6 percent to 8.5 million metric tons, Ashok Sethia, president of the Solvent Extractors’ Association of India, said today. Palm oil will account for more than 80 percent of the total, he said.
Production of India’s monsoon-sown oilseeds, mainly peanuts, may drop as much as 1.5 million tons after the weakest rainfall in at least seven years forced farmers to plant fewer acres, the association said. Record imports by the nation may sustain a 29 percent rally in palm oil prices in Malaysia this year.
“The import taps are open, and shortages will be met through imports,” Sethia said in a phone interview from Kolkata.
December-delivery palm oil increased 0.4 percent to 2,190 ringgit ($631) a metric ton on the Malaysia Derivatives Exchange Sept. 18. Markets in Malaysia and Indonesia, the top producers, are shut today for holidays.
Prices may remain in a 2,000-2,500 ringgit a ton band until November and gain about 10 percent by the year end, Sethia said.
India’s vegetable oil imports in the 10 months ended August jumped 49 percent to 7.07 million tons, the association said on Sept. 14. Purchases of crude palm oil gained 29 percent to 4.2 million tons, and soybean oil gained 63 percent to 823,190 tons.
Crop Area
Farmers sowed oilseeds to 16.74 million hectares, compared with 17.98 a year earlier, because of drought, Sethia said. A revival in rains in the past month has increased soil moisture, likely helping early sowing of winter rapeseed crop, he said.
The government must restore taxes on edible oil imports during the harvest of monsoon crop and planting of the winter crop to ensure farmers get remunerative prices, Sethia said.
“You need farmers to boost cultivation to cut dependency on imports,” he said.
India abolished import duty on crude palm oil in April last year, and in March lifted a 20 percent tax on crude soybean oil purchases. The two commodities are substitutes. Refined edible oils are taxed at 7.5 percent.
The country relies on imports to meet half its cooking oil needs and buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.
Source : Bloomberg.com