NEW DELHI (Reuters) - India reclaimed its position as number one edible oil importer in 2009, with purchases up 35 percent to a record 8.4 million tonnes on lower oilseed output and an appreciating currency.
The massive jump in imports outpaced an 8.4 percent increase in Chinese buys to 8.16 million tonnes, putting India, which takes most of its edible oil in the form of palm oil, back as the world's number one buyer after a six-year hiatus.
Edible oil imports in December rose 6 percent to 761,835 tonnes, trade body the Solvent Extractors' Association of India (SEA) said in a statement, the higher end of traders' forecasts from 535,000 tonnes to 800,000 tonnes.
Damage to the domestic oilseed crop due to drought, a lower import tax on refined oils, the rupee's strength and rising consumption would lead to a further increase in imports by India, SEA Executive Director B.V Mehta said.
"I think these factors will push the country's vegetable oil imports between 9.0 and 9.5 million tonnes in the current oil year," Mehta said, referring to the Indian oil year that runs from November to October.
India is one of the largest agriculture producers but its labour-intensive, mostly unirrigated farming depends on the monsoon, which was the worst in 37 years last summer.
The farm ministry in November said summer-sown oilseed output would fall to 15.2 million tonnes from 17.8 million tonnes a year ago.
Battling lower crop output and food inflation, which rose near 20 percent in December, the government opened the floodgates to imports by dropping a crude vegetable oil import tax on April 1, 2008 and cutting the duty on refined oils to 7.5 percent from 27.5 percent.
The rupee, which appreciated 3.4 percent in the October-December quarter, rose to 45.2850 per dollar on Monday, its strongest since Sept. 22, 2008.
The appreciation of rupee vis-a-vis dollar and the zero import duty on crude oil and marginal duty on refined oils encouraged larger imports during the peak crushing season in India," Mehta said.
The factors also helped India's palm oil imports reach 6.4 million tonnes in calendar 2009 and make the country the number one importer, Mehta said.
Strong demand from both China and India helped Malaysian palm oil futures recover from sharp falls in late 2008 to post a 57 percent increase in 2009
Source : REUTERS