Adani Sees Record India Cooking Oil Imports as Demand Surges

Cooking oil imports by India, the world’s biggest palm oil buyer, will probably climb to a record this year as demand outstrips supplies, said Adani Wilmar Ltd.

Purchases in the year through October are set to exceed the 9.98 million metric tons in 2011-2012, according to Atul Chaturvedi, chief executive officer of the country’s second- biggest importer that’s 50 percent owned by Wilmar International Ltd. (WIL) Buying surged 26 percent in the three months through January, the Solvent Extractors’ Association of India estimates.

Increasing purchases may trim inventories in Malaysia and Indonesia, the largest producers, and bolster benchmark futures in Kuala Lumpur, which slumped to a five-week low yesterday. Expanding demand in India may counter the impact of an increase in import taxes and higher export duties in Indonesia and Malaysia, said Chaturvedi.

“The quantum of imports is basically a function of supply and demand,” he said in a phone interview from western Indian city of Ahmedabad. “Whatever the price, it will get imported if there is a requirement in the country. Whether you like it or not, vegetable oil is an essential commodity.”

India meets more than 50 percent of its cooking oil demand through imports of mostly palm from Indonesia and Malaysia, and soybean oil from Brazil and Argentina. Demand will expand 6 percent to 17.5 million tons this year due to rising population and disposable incomes, said B.V. Mehta, executive director of the extractors’ association.

Global Average

Consumption may surge to 23 million tons by 2020, and imports will rise significantly to meet this demand, D. Bhalla, a joint secretary in India’s food ministry, said in September. The annual per-capita usage in the country is 13.5 kilograms, compared with the global average of about 26 kilograms, he said.

Palm oil for May delivery advanced as much as 1 percent to 2,443 ringgit ($788) a ton on the Malaysia Derivatives Exchange today, before ending 0.4 percent lower at 2,410 ringgit. Futures fell to a three-year low of 2,217 ringgit on Dec. 13 as stockpiles in the main producers climbed to a record.

Inventories in Malaysia jumped to an all-time high of 2.63 million tons in December, before falling to 2.58 million tons last month, according to the palm oil board. The country introduced duty-free shipments from Jan. 1 to clear the holdings and will boost the tariff to 4.5 percent in March. Indonesia raises its tax to 10.5 percent from 9 percent.

Tax Increase

India may increase taxes on imports to shield farmers from cheap supplies, according to the extractors’ group. Finance Minister Palaniappan Chidambaram may raise the tariff on unprocessed oils to 10 percent from 2.5 percent in the federal budget tomorrow, while the tax on refined varieties could increase to 20 percent from 7.5 percent, it said last week. The government imposed a 2.5 percent tax on unprocessed oils for the first time since 2008 last month.

Oilseed output in India will be little changed at 29.5 million tons in the year ending June 30, from 29.8 million tons a year earlier, the farm ministry said on Feb. 8. Production of rapeseed, the biggest oilseed crop grown in the winter season, is estimated to climb 20 percent this year to 7.1 million tons, the extractors’ association said Feb. 12.

“If we have a bumper rapeseed crop, that might bring some sobriety in imports, but it’s early days yet,” Chaturvedi said.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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