Edible oil import growth likely slow at 10%

Higher import in previous year would help control prices of cooking oil

Despite a rise in consumption, India's edible oil import growth likely to hover around 10% during current oil year (November 2015 - October 2016) as against 24% in previous year. According to industry sources, this is because of higher domestic stock position due to sharp gained in import during oil year 2014-15.

As per the Solvent Extractors' Association of India (SEA), during November 2015 to June 2016, the country had imported about 9.76 million tonnes edible oil higher by 10% from 8.84 million tonnes in corresponding period of 2014-15. Total import may stand at 15.5-16 million tonnes by end of current oil year.

"Because of dry period in past two years, import of vegetable oil was higher and this has created huge stock domestically. Because of this we may see slow growth in import this year," said Angshu Mallick, chief operating officer at Adani Wilmar, which sells edible oil under the brand name Fortune.

 

Out of total import, India imports palm oil and soyabena oil maximum. Both the oil has over 85% share in overall edible oil import. Crude palm oil output in Malaysia, the world's second biggest oil producer, climbed to 1.53 million tons in June compared to 1.36 million tons in May.

Malaysia's palm oil stocks in June jumped 7.7% to 1.77 million tons compared to 1.64 million tons in May. India, the world's leading vegetable oil buyer, had imported 907,347 tonnes of palm oil in May last year. Palm oil make up more than 65% of the country's total vegetable oil imports. In last few months, there has been a sharp rise in the import of cheap RBD palmolein.

According to SEA data, till June, 2016, stock position at port and pipelines is around 2.33 million tonnes, which is also on higher side.

"Globally supply is good and domestic production also expected to be go up. This may end the vegetable oil import at about 16 million tonnes during current oil year," said B V Mehta, executive director of SEA.

Due to weak demand during summer prices of cooking oils have been decreased. Demand likely to be start as festivals season is coming but looking to the stock position prices may not increase in near future.

Mallick said, "Correction in prices is depending on rupee dollar movements. We see the rise in demand but price may decrease only if the rupee strengthens against the dollar."

During June and July, palm oil prices have decreased from Rs 533 to Rs 500 per 10 kg and soya oil prices have fallen to Rs 625 from Rs 640 per 10 kg. Average prices of palm oil during the 2015-16 oil season has remained at Rs 477 per 10 kg while soya oil was stood at Rs 652 per 10 kg. According to industry sources, price may fall if the rupee strengthens against the dollar in coming time.