22/09/2007 (Bloomberg) - India, the world's second-biggest buyer of vegetable oils, may import more of the commodity as some farmers lower acreage for mustard and other oilseeds to grow more wheat.
Imports may rise 9 percent to 6 million metric tons in the crop year starting Nov. 1, Dorab Mistry, a director with Godrej International Ltd., said at an industry conference in Goa. Mistry has traded vegetable oils since 1976.
Increased purchases by India may boost palm oil prices in Malaysia and Indonesia, the world's biggest producers. Palm oil on the Malaysia Derivatives Exchange has advanced 72 percent in the past year, reaching a record in June, on increased demand in China and India, the world's biggest buyers of vegetable oils. Global prices of wheat have more than doubled in the past year.
``Ask yourself, if at current market prices of wheat, will farmers switch to oilseeds or will it be the other way around,'' Mistry said.
India may import 1.91 million tons of edible oils in the first six months of the crop year, up 12 percent from a year- earlier, said Govindlal G. Patel, director of Dipak Enterprises. Patel has been trading cooking oils for more than three decades.
India's edible oil imports rose 10 percent to 3.76 million tons in the 10 months ended August from a year ago, according to the Solvent Extractors Association of India, which represents about 800 oilseed processors. Crude palm oil imports rose 24 percent in August to 276,151 tons from a year earlier, while imports of crude soybean oil climbed 39 percent to 159,324 tons.
Palm oil, mostly imported from Malaysia and Indonesia, was at a record 2,764 ringgit on June 6, and soybean oil rose to a 23-year high on the Chicago Board of Trade early this year. Retail wheat prices in India's capital of New Delhi have gained 41 percent in the past two years, according to the food ministry.
India's output of monsoon oilseeds, including peanuts and soybeans, may rise 15 percent to 15.15 million tons this year, helped by above-normal rains, the Central Organization for Oil Industry & Trade, the nation's biggest grouping of oilseeds processors, said Sept. 10.
The increase may not be enough to meet the nation's cooking oil demand, forecast by TransGraph Consulting Pvt. to climb by 400,000 tons to 11.74 million tons in the year starting Nov. 1. Hyderabad-based TransGraph advises commodity traders.
Sowing of the monsoon crop, which includes soybeans, begins in June. Harvesting starts in mid-September and continues until the end of November. The crop accounts for 60 percent of India's total oilseed production.
The winter crop, including mustard, makes up the rest and will be sown beginning next month. Harvesting begins in March. Mustard oil is the third-most used cooking oil in the country and makes up more than 70 percent of the winter-sown oilseeds.