India, the world's biggest buyer of vegetable oils after China, may import more cooking oil in the year starting November as dry weather reduced monsoon sowing of peanuts, sunflower and sesame seeds.
Purchases may increase by at least 500,000 metric tonnes from 5.1 million tonnes this crop year ending October 31, said Govindlal G Patel, director of Dipak Enterprises, in an interview. Patel, 69, has been trading the commodity for more than four decades.
India imports more than 85 per cent of its edible oil in the form of palm oil for use in curries and fried foods. Prices of palm oil have tumbled 44 per cent from a March record of 4,486 ringgit ($1,303) a tonne, cutting import costs for the country that's battling the fastest inflation in 16 years.
“It will be cheaper for the government to buy palm oil,” said Harish Galipelli, head of research at Karvy Comtrade Ltd, from Hyderabad. “The government will increase its imports as inflation is the main concern now.”
Spiralling food prices have caused Prime Minister Manmohan Singh's Congress party to lose ground in nine of 11 state polls since January 2007. Singh faces elections in six more states this year and a national election by May 2009.
Farmers planted peanuts on 5.03 million hectares, 2.3 per cent less from a year ago as of August 28, the farm ministry said. The area for sunflower seeds fell by 30 per cent to 495,000 hectares, and for sesame by 9 per cent to 1.36 million hectares. The seeds yield more oil when crushed than soybeans.
Oilseeds Production
“Even if there's an increase in oilseed production, the oil availability will be less as most of the increase in area is in seeds that bear less oil,'' Patel said by telephone from Rajkot in Gujarat. Most of the imports, which have also increased because of lower mustard seed output, will arrive between November and February, he said.
Production of monsoon-sown oilseeds, which make up more than 60 per cent of the total, may climb 4 per cent to 17.5 million tonnes in the year ending June 2009, Patel said. India probably harvested 19.84 million tonnes the previous year, the government said in July.
The monsoon crop is sown in June and harvested this month.
Edible oil imports jumped 10 per cent to 3.63 million tonnes in the nine months ended July from 3.3 million tonnes in the year ago period, according to the Solvent Extractors' Association of India. Palm oil made up 88 per cent of total purchases.
Rains have been below average since the monsoon season began on June 1 in Karnataka, India's largest producer of sunflower, and in Gujarat, the biggest peanut-grower, according to the weather office. Falls in Maharashtra, the second-biggest soybean-grower, have been less than normal.
More Rains Needed
“We need two more spells of rains in Gujarat,” Patel said. “If rains come, the peanut crop will be about 2 million tonnes in the state and if they don't, output will be 1.5 million tonnes.”
India, which relies on overseas purchases to meet almost half its edible oil demand, in March scrapped the import tax on crude soybean and palm oils, and cut the levy on refined edible oil, to bolster domestic supplies.
The government banned futures trading in soybean oils in May to rein in prices of the commodity. The country buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.
