Cooking-oil imports by India, the biggest palm oil buyer, will climb as much as 12 per cent to a record after dry weather and excessive rain curbed oilseed crops, according to GG Patel & Nikhil Research Co.
Purchases will total 9.2 million metric tonnes to 9.4 million tonnes in the year that began on November 1, compared with 8.37 million a year earlier, said Managing Partner Govindlal G Patel, who has traded vegetable oils for more than three decades. India bought a record 8.82 million tonnes in 2009-2010.
The tropical oil, used in everything from candy bars to biofuels, advanced to the highest level in eight months on February 28 as dry weather cut soybean harvests in South America. Global inventories of soybean and palm oils will drop to 7.84 million tonnes by the end of 2011-2012, the lowest in four years, the US Department of Agriculture data show. About 80 per cent of India’s purchases consist of palm oil.
It’s “a cheaper option for India,” Ryan Long, vice-president of futures and options at OSK Investment Bank Bhd., said by phone from Kuala Lumpur. “Higher demand from India will support palm-oil prices.”
The May-delivery contract gained 0.5 per cent to 3,285 ringgit ($1,094) a tonne on the Malaysia Derivatives Exchange on Thursday.
Futures, which have rallied from a 12-month low of 2,754 ringgit on October 6, may reach 4,000 ringgit by June as demand growth outstrips production, according to Dorab Mistry, director of Godrej International Ltd.
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Shipments from Malaysia may jump to a record 19.8 million tonnes in 2012 from last year’s 18 million tonnes, aided by rising demand in India and China, Lee Yeow Chor, chairman of the Malaysian Palm Oil Council, said last month.
Exports to India climbed 25 per cent to 460,220 tonnes in the four months ended February 29 from a year earlier, according to surveyor Societe Generale de Surveillance.
Oilseeds production in India may drop to 30.5 million tonnes in the year ending June 30 from 32.48 million tonnes a year earlier, according to the farm ministry.
The soybean harvest was damaged in Madhya Pradesh, the biggest grower, because of excessive rains, while the mustard harvest crop will decline after dry weather in November and December curbed yields, Patel said.
A lower crop may boost domestic oilseed prices by 20 per cent in June from a year earlier, said Sujan Hajra, the chief economist at Anand Rathi Financial Services Ltd in Mumbai. The wholesale oilseeds-price index climbed 13 per cent in January from a year earlier, according to the commerce ministry.
Cooking-oil imports climb-ed 2.9 per cent to 2.13 million tonnes in the three months ended January 31 from a year earlier, the Solvent Extractors’ Association of India said on February 14.
Palm-oil purchases rose 4.9 per cent to 1.8 million tonnes, it said. Consumption may gain 3.8 per cent to 16.3 million tonnes in 2011-2012 from 15.7 million tonnes a year earlier, said Patel.