Palm imports by India, the largest buyer, will probably climb to a record next year as domestic oilseed harvests trail consumption and a growing population boosts demand for the oil used in noodles and candies.
Purchases may increase 5 percent to 8.7 million metric tons in the year beginning Nov. 1 from 8.3 million tons this year, said Govindlal G. Patel, managing partner at G Patel & Nikhil Research Co., who has traded cooking oils for more than three decades. Imports were 7.57 million tons in 2011-2012, according to data from the Solvent Extractors’ Association of India.
Increased imports may trim inventories in Indonesia and Malaysia, the biggest producers, and stem a third year of price declines, the worst run since at least 1996. World stockpiles are set to rise to a record by the end of 2013-2014 as production climbs to an all-time high and demand expands the least in 12 years, the U.S. Department of Agriculture says.
“Our per capita consumption of oil is very low compared to the global average and demand is growing, so we need to import,” said Patel. Consumption may grow at the same pace as last year as a slowing economy curbs some purchases, he said.
India’s per capita consumption is growing an average of 4 percent annually and is estimated at 13.5 kilograms this year, said B.V. Mehta, executive director of the association.
The country meets more than half its cooking oil demand through imports, buying palm from Indonesia and Malaysia and soybean oil from the U.S., Brazil and Argentina. The country produces about 8 million tons of vegetable oils annually.
Palm for delivery in December fell 0.7 percent to 2,300 ringgit ($726) on Bursa Malaysia Derivatives in Kuala Lumpur today. Futures lost 5.7 percent this year, extending the combined 36 percent slump in 2011 and 2012.
“Indian imports in 2013-2014 will hit a record high, but not as high as some people suggest,” Dorab Mistry, a director at Godrej International Ltd., said in e-mail interview. “Consumption is being hurt by the local economic slowdown.”
The economy expanded at the slowest pace since 2003 in the year ended March as investment fell and consumer spending in the nation of 1.2 billion people moderated. HSBC Holdings Plc and Goldman Sachs Group Inc. cut their growth estimates to 4 percent for this year.
Crude palm oil and refined, bleached and deodorized palm olein imports in the 10 months to August rose 14 percent to 6.7 million tons, according to association data. Total cooking oil imports climbed 8 percent to 8.79 million tons between November and August, it said.
“Overall imports will rise to 10.6 million tons this year because output was lower last year,” said Patel. “We will need to see how the winter oilseed crop shapes up.”
The rupee slumped 8.1 percent in August, the biggest monthly loss since 1992, making purchases more expensive. The currency recovered to 62.315 to a dollar today after touching a record low of 68.845 on Aug. 28.
“When the rupee was at 67-70, imports were difficult,” said Patel. “If it stays between 60-63, then consumers may not find cooking oil costly.”
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