'India to fuel global edible oil demand'

India still holds a pivotal role in the global edible oil market despite losing its position as the number one importer this year, according to industry experts and analysts.

"This was largely owing to India's dependence on edible oils to meet demand," said James Fry, managing director of the London-based LMC International Ltd.

Domestic annual consumption was likely to be about 12-12.5 million tonne, which exceeds output at about 7 million tonne, thereby leaving a huge room for imports.

In oil year 2004-05 (that is November-October), the country's edible oil imports are estimated to touch an all-time high of 5.2 million tonne against last year's 4.4 million tonne. A section of industry experts, however, feel that imports in 2004-05 may even touch a high of 5.65 million tonne.

Industry experts feel imports to be almost the same next oil year as this year. Thomas Mielke of German newsletter OilWorld, however, pegs the estimate slightly lower at 5.1 million tonne next year, taking into account the huge carryover stock of about 28-30 lakh tonne of mustard/rapeseed.

Globally, while palm oils are cheaper vis-à-vis soyoil, India's duty tariff differential in favour of the latter makes imports (of the latter) cheaper and, thereby, holds a pivotal position in governing edible oil prices. Fry commended India's favouring soyoil over palm oils as it had resulted in price stability.

After a good growth in 2004-05, Fry expects growth, of both demand and production, to see a slowdown. "Slowdown in case of production will be faster than consumption (supported by 4 million tonne of fuel use".

He, however, says the average year-on-year fall in prices of all oilseed products by about 2.5 per cent was likely to continue next year too despite the talk of excellent bio-diesel opportunities, courtesy rising crude oil prices.

"The price fall was largely owing to better yields and lower cost of production which the sector was seeing year-on-year now."

On the biodiesel opportunity, Fry said, "It would take a few more years to develop. Today, the global biodiesel output was just around 4 million tonne and just meets 3 per cent of the total energy demand. Investment in the sector was being talked about courtesy huge energy prices."

"However, five years down the line when investment made in crude oil production and refining business begin to give returns, the benefits of biodiesel investments would really see the test of time."

Fry said highs and lows are part of the system so even high prices of crude oil are seen down at around $45-50 a barrel in 2010 from the current around $65-70.

On the affect of hurricanes (Katrina and now Rita) on the US soybean growing regions, he said, "We are hopeful that post-hurricanes, River Mississippi may again flow via the regions and this will be better for the on-year crops.