11/10/2007 (Reuters), NEW DELHI - Increased imports are expected to keep edible oil prices stable in India even as demand picks up during the current festival season, analysts and industry figures said on Thursday.
Traders said arrival of the new season soybean would also keep a lid on prices.
Prices of both palm and soy oils should remain below 490 rupees ($12.47) per 10 kg in November and December, even though a series of religious festivals and holidays would lift consumption substantially, they said.
"I can see supplies picking up," said Shardul Sharma, an analyst with brokerage Sharekhan Commodities. "There is no reason to see prices breaching the 490 rupees level."
A strong rupee had made imports more competitive and helped check edible oil prices, said Avinash Raheja of Commtrendz Risk Management Services.
The rupee has risen more the 12.5 percent against the dollar this year. It hit a 9-1/2 year high of 39.27 per dollar on Thursday.
Indians consume around 11 million tonnes of edible oils a year. Close to six million tonnes are imported - making it the world's second-biggest buyer after China - including palm oil from Malaysia and Indonesia and soyoil from Brazil and Argentina.
The government has asked state-owned firms such as MMTC Ltd and PEC Ltd, as well as the National Agricultural Cooperative Marketing Federation of India, to import more oils to contain prices and meet a rise in demand.
"We have imported 42,000 tonnes of edible oils so far and we may buy again," said Alok Ranjan, managing director of the National Agricultural Cooperative Marketing Federation.
MMTC, which imported 6,000 tonnes of crude palm oil last week, has placed an order to buy another 5,500 tonnes this week and plans to float more import tenders.
The PEC has imported 30,000 tonnes of oils this year, while STC Ltd has also bought a small quantity.
Apart from higher imports by government-owned firms, private traders have also increased purchases, said B.V. Mehta, executive director general of the Solvent Extractors' Association.
"Import volumes will go up from a normal of around 400,000 tonnes a month to meet the festival demand, but arrivals of the domestic oilseed crop will obviate the need to jack up monthly imports substantially," he said.
He said the size of the domestic soybean crop had helped contain prices.
The Central Organisation of Oil Industry and Trade last month estimated soybean output at 8.6 million tonnes in the year to the end of October, up from 7.14 million tonnes in the 2006 crop year.