Imports fell a staggering 16 per cent in the first four months of the 2010-11 oil year.
India’s dependence on imported vegetable oil is likely to decline by six percentage point to the lowest in three years due to higher production from domestic sources. Higher oilseed output and favourable crushing parity have helped mills to produce more from domestic sources and reduce reliance on imports. Experts believe that the contribution of import in overall vegetable oil consumption will decline this year to 47 per cent as compared to a staggering 53 per cent last year.
Vegetable oil imports to India declined a staggering 16 per cent in the first four months of the oil year 2010-11 (November-October) due to falling demand of imported oil. India imports nearly 85 per cent of crude palm oil mainly from Indonesia while the remaining 15 per cent of both crude and refined oil is met through imports from Malaysia and Argentina, among others.
| OIL METER In lakh tonnes | ||||
| Year | Total consumption | output | Imports | Import dependence (%) |
| 2010-11* | 16.7 | 8.5 | 8.0 | 47.0 |
| 2009-10 | 16.6 | 7.8 | 8.8 | 53.0 |
| 2008-09 | 16.3 | 8.2 | 8.1 | 49.7 |
| 2007-08 | 14.1 | 8.5 | 5.6 | 39.0 |
| 2006-07 | 12.5 | 7.8 | 4.7 | 37.6 |
| Source: SEA, * estimated | ||||
Between November 2010 and March this year, vegetable oil imports plunged to 3 million tonnes as against 3.6 million tonnes in the corresponding period of the previous year. Considering the fall in import continues, overall import of veg oil in India will decline to 8-8.2 million tonnes.
Dorab Mistry, director of Godrej International attributed the fall in import to higher availability of domestic seeds and dramatic fall in crude palm oil prices.
“We are already half a million tonne short in imports this year as compared to last year. But it is too early to say that India’s imports will decline to below 8 million tonnes from 8.8 million tonnes last year. Now we must see if the higher production of domestic oils would continue for the rest of the year,” said Mistry.
If world prices fall and RBD olein comes down locally to Rs 50,000, then local production of mustard oil will decline. Stockists will prefer to hold stock and wait for prices to improve. So, it is a dynamic situation, Mistry added.
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Domestic oil production, meanwhile, is estimated to surpass all previous records and set the new benchmark at 8.52 million tonnes this year as against 7.77 million tonnes last year. The Agriculture Ministry estimated total oilseed output to rise to 30.25 million tonnes in 2010-11 as against 24.8 million tonnes last year. Soybean production is estimated at 12.6 million tonnes and groundnut production at 7.1 million tonnes.
On basis of the additional production of about 6 million tonnes of oilseeds, India would be producing an additional 2 million tonnes of oils during the current year. This should check the unabated imports, said B V Mehta, executive director of the apex trade body the Solvent Extractors Association (SEA).
Meanwhile, SEA urged the government that the industry would have to therefore step up oilmeal exports to dispose off the surplus. In view of the expected bumper oilseed crop, the restriction imposed on export of edible oil in bulk as well as imposition of export duty on deoiled rice bran becomes redundant and needs to be done away.
Oil mills are processing maximum quantity of seeds to make higher margin this year. Unlike last year around same time, when crush margin was negative at around Rs 1,000 a tonne, the same is positive this year and mills are making profit between Rs 2,500 and Rs 3,000 on every tonne of seed.
Crude palm oil prices turned bearish for the near-month contract to trade currently at 3,360 ringgit in Malaysia.