Palm oil imports by India, the world’s biggest buyer, jumped to the highest level since December as tumbling prices prompted traders and refiners to replenish inventories.
Overseas purchases of crude and refined palm oils rose 14 percent to 648,503 metric tons in July from a year earlier, the Solvent Extractors’ Association of India said in an e-mailed statement today. That’s more than the median estimate of 612,000 tons in a Bloomberg survey. Crude soybean oil imports jumped 30 percent to a record 306,068 tons, and sunflower oil shipments surged 80 percent to 111,936 tons, the association said.
Futures in Kuala Lumpur tumbled from an 18-month high in March into a bear market last month on forecasts for record U.S. production of soybeans, which can be crushed to make an alternative oil. Rising demand from India may trim supplies in Indonesia and Malaysia, the world’s biggest producers, and help prices recover from near one-year low. Oilseed area in India is poised to drop to the lowest level in 12 years after a weak start to the monsoon spurred farmers to switch to cotton.
“Palm oil prices have corrected and that has motivated people to import more,” said Faiyaz Hudani, associate vice president at Kotak Commodity Services Ltd. in Mumbai. “The new crop is expected to be lower and late, and we are getting cheap oil from the international markets, so imports will continue to be higher.”
Futures tumbled to 2,162 ringgit ($677) a ton on Bursa Malaysia Derivatives yesterday, the lowest level since July 2013, and were at 2,178 ringgit by 3:06 p.m. in Mumbai. Soybean oil’s premium over palm, the world’s most-used cooking oil, narrowed to average about $93 a ton this year from $244 a ton in 2013, according to data compiled by Bloomberg.
Oilseed area in India is poised to slump as much as 24 percent to 15 million hectares this year after a weak start to the monsoon, Agriculture Commissioner J.S. Sandhu said July 31. The monsoon was 43 percent below a 50-year average in June, delaying seeding of crops from soybeans to cotton and rice. The deficit narrowed to 18 percent as of yesterday, the India Meteorological Department said.
Cooking oil stockpiles at ports and scheduled shipments rose to 1.59 million tons on Aug. 1 from 1.49 million tons a month earlier, the association said. Total imports, including for industrial use, jumped 25 percent in July to 1.11 million tons, it said. Purchases rose 2 percent to 8.19 million tons in the nine months through July from a year earlier, it said.
“At the start of the season people were expecting imports to be same as last year or even lesser,” Hudani said by phone. Imports may reach a record as “demand is increasing year-on-year, and yields and refining capacities are not increasing the way it should to take care of that incremental demand.”
India imports more than 50 percent of its demand, shipping palm oil from Indonesia and Malaysia, and soybean oil from the U.S., Brazil and Argentina.
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Source : Bloomberg