International BusinessDrought to keep India's cooking oil imports at record
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.
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Purchases in the year starting November 1 may rise as much as 6 per cent to 8.5 million tonnes, Ashok Sethia, president of the Solvent Extractors’ Association of India, said on Tuesday. Palm oil will account for more than 80 per cent of the total purchase, he said.
Production of India’s monsoon-sown oilseeds, mainly peanuts, may drop as much as 1.5 million tonnes 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 per cent rally in palm oil prices in Malaysia this year.
“The import taps are open, and shortages will be met through imports,” Sethia said in Kolkata.
December-delivery palm oil increased 0.4 per cent to 2,190 ringgit ($631) a tonne on the Malaysia Derivatives Exchange September 18. Markets in Malaysia and Indonesia, the top producers, are shut on Tuesday for holidays.
Prices may remain in a 2,000-2,500 ringgit a tonne band until November and gain about 10 per cent by the year end, Sethia said.
India’s vegetable oil imports in the 10 months ended August jumped 49 per cent to 7.07 million tonnes, the association said on September 14. Purchases of crude palm oil gained 29 per cent to 4.2 million tonnes, and soybean oil gained 63 per cent to 823,190 tonnes.
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 per cent tax on crude soybean oil purchases. The two commodities are substitutes. Refined edible oils are taxed at 7.5 per cent.
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.