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Cooking-Oil Imports by India Set to Climb as Palm Oil Slumps

Cooking-oil imports by India, the world’s largest consumer after China, probably jumped for a second month in September as the biggest monthly slump in palm oil prices in four years spurred demand from refiners.

Purchases rose 4 percent to 950,000 metric tons last month from 912,341 tons a year earlier, according to the median estimate in a Bloomberg survey of five processors and brokers. Imports of crude and refined palm oils increased 8 percent to 750,000 tons from 692,200 tons, the survey showed. The Solvent Extractors’ Association of India will publish data on Oct. 15.

Palm oil has slumped 19 percent since the end of August as stockpiles climbed to record levels in Indonesia and Malaysia, the biggest producers, and a global economic slowdown pared demand from China to Europe. Rising Indian imports may help trim inventories in Asia amid a seasonal increase in production.

“The price-fall over the last month and rupee appreciation helped boost imports during the lean supply period,” said Sandeep Bajoria, chief executive officer of Mumbai-based broker Sunvin Group. “A lot of cargoes are due in October as well because of lower prices.”

Palm oil for delivery in December rose 0.8 percent to 2,457 ringgit ($799) a ton on the Malaysia Derivatives Exchange today. Futures fell 15.7 percent in September, the most since October 2008. India’s rupee gained 5.1 percent in September, the biggest rise since January, lowering costs for commodities priced in dollars.

Discount Widens

Palm oil comprises almost 80 percent of India’s cooking-oil imports. The country buys palm oil from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.

The slump in palm oil prices widened it’s discount to soybean oil, boosting demand, said Pradip Desai, managing director of Palmtrade Services Pvt., a Mumbai-based broker.

Soybean oil’s premium over the tropical oil reached $378.98 a ton on Oct. 2, the most since September 2008, and was at $333.91 today. Soybean oil and palm oil are used in foods and fuels.

“The discount in prices has given importers some incentive to buy,” Desai said. “Imports have ballooned in September as the shortfall was not being met by the domestic crop, but from October there will be some replenishment of supplies from the new crop harvest.”

Record Imports

Imports are set to surpass 10 million tons for the first time after dry weather damaged India’s oilseed crops and as demand climbs, GG Patel & Nikhil Research Co. Managing Partner Govindlal G. Patel said last month. Purchases may gain 5.4 percent to 10.3 million tons in the year starting Nov. 1 from about 9.78 million tons this year, said Patel, who’s traded cooking oils for more than three decades.

India’s monsoon-sown oilseed output may fall to 13.9 million tons from 14.6 million tons a year earlier, while consumption will increase 4 percent to 17.1 million tons in 2012-2013, he said. Shipments in the nine months through August jumped 19 percent to 8.16 million tons, according to the extractors’ association. India bought 8.7 million tons in 2010-2011.

Crude soybean-oil imports probably fell to 70,000 tons in September from 120,488 tons a year earlier, while sunflower-oil purchases may have climbed to 80,000 tons from 58,686 tons, three of the respondents from the survey said. Stockpiles of all vegetable oils at Indian ports may be 500,000 tons, said Atul Chaturvedi, chief executive officer of Adani Wilmar Ltd.

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