Palm oil purchases by India will probably jump to the highest ever as demand for everything from fried snacks to noodles worsens a domestic shortage, according to Ruchi Soya Industries Ltd.
Imports are set to increase 5.6 per cent to 9.4 million metric tons in the 12 months starting Nov 1 from 8.9 million tons this year, said Dinesh Shahra, managing director of the largest refiner and importer. Vegetable oil shipments may climb to 14 million tons from 13.5 million tons, he said.
Rising incomes in Asia’s third-largest economy have fuelled consumption of cooking oils, boosting dependence on imports which meet more than 50 per cent of the country’s needs. Now El Nino threatens to curb monsoon rain and hurt crops from rice and cotton to oilseeds, spurring more shipments. That may trim inventories in Indonesia and Malaysia, the top palm producers.
“Growth in consumption and limited carryover of domestic oilseeds will lead to an increase in imports,” Mr Shahra said in an e-mail on June 15.
Production of cooking oils has stagnated at about 8 million tons. That means the country will have to boost imports to 16.3 million tons by 2020-2021, or more than 60 per cent of domestic demand, according to the Solvent Extractors’ Association. Purchases will expand by as much as 900,000 tons annually as per capita income rises and the population grows, it says.
Soybean oil imports will increase to as much as a record 3 million tons in 2015-2016 from 2.75 million tons this year, while sunflower oil purchases will be unchanged at 1.5 million tons, Mr Shahra said.
Shipments are climbing after palm and soybean oil prices fell from a year earlier, according to the extractors’ association. The country buys palm oil from Indonesia and Malaysia and soybean oil from the US, Brazil and Argentina.
Futures in Kuala Lumpur fell 6.1 per cent in the past year to 2,284 ringgit on the Bursa Malaysia Derivatives on Wednesday. Soybean oil in Chicago retreated 16 per cent and reached 29.32 cents a pound in January, the lowest since December 2008.
The soybean harvest may climb 11 per cent to 10 million tons in 2015-2016 as plantings expand about 8 per cent, said Shahra, whose company can crush about 3.72 million tons annually. A steady start to the monsoon and competitive crop prices are spurring farmers to sow, he said.
“June is turning out to be normal for the oilseed region,” Mr Shahra said. “We are taking a guess that India might be able to give a slip to the El Nino impact. Despite two years of unusual rainfall patterns, our research shows that soybeans have been successful in giving realisations to farmers.”
Monsoon rainfall has been 12 per cent more than a 50-year average since June 1, defying government forecasts that it would fall short for a second straight year. The El Nino, which can cause droughts in Asia and wetter summers in North America, may reduce rains to 88 per cent of the long-term average, the Meteorological Department predicts.
“Soybean is also a sturdy and safe crop to plant in times of less rains,” said Rajesh Agrawal, member of the executive committee of the Soybean Processors Association.
(Source – http://www.blackseagrain.net/novosti/biggest-palm-oil-refiner-in-india-sees-imports-surging-to-record)