Cooking oil imports by India, the largest palm oil buyer, climbed for the third straight month because of a decline in prices and on speculation import taxes would rise, a processor group said. Reserves gained to a record.
Shipments of vegetable oils, including for industrial use, advanced 11 percent to 969,175 metric tons in February from 876,669 tons a year earlier, the Solvent Extractors’ Association of India said in an e-mailed statement today. That matched a median estimate of 975,000 tons in a Bloomberg survey of five processors and brokers this week.
Rising demand from India may help reduce inventories in Indonesia and Malaysia, the biggest palm oil producers, and pare a 30 percent loss in futures in Kuala Lumpur over the past year. Malaysian inventories eased to 2.44 million tons last month from a record 2.63 million tons in December. Indonesian stockpiles may drop to 2.3 million tons this year from 2.5 million tons at the end of 2012, the Palm Oil Board said.
“Buyers imported more as there was a feeling that the government may raise import taxes in the budget,” B.V. Mehta, executive director of the association, said by phone. “There may be a marginal drop in imports this month because of rapeseed crop arrival pressure and higher stockpiles.”
Palm oil for delivery in May slid 1.4 percent to 2,364 ringgit ($758) a ton on the Malaysia Derivatives Exchange. Futures slumped to a three-year low of 2,217 ringgit on Dec. 13. Soybean oil’s premium was $324.98 a ton today, compared with an average $243.45 in the past year, according to data compiled by Bloomberg.
India, which imposed a 2.5 percent tax on unprocessed oils in January while doubling the benchmark price to calculate the tariff, left the levies unchanged in the annual budget on Feb. 28. Cooking oil use in India, which meets more than half of its demand through imports, is growing 4 percent to 5 percent a year as the population expands 20 million annually and incomes rise, according to the extractors’ association.
Inventories, including those at ports and in the pipeline, were at an all-time high of 1.96 million tons as of March 1, association data showed. The reserves are enough to meet 40 days of consumption compared with the usual 30 days, it said.
Crude palm oil imports jumped 86 percent to 669,678 tons in February, while refined palm oil purchases fell 62 percent to 116,237 tons, the extractors’ association said. Soybean oil imports declined 20 percent to 62,585 tons, while sunflower oil purchases dropped 24 percent to 84,310 tons, it said.
“Declining prices of palm oil have made it extremely competitive in India,” Dorab Mistry, director at Godrej International Ltd., said on March 6. Palm oil imports by India may climb to a record 8.6 million tons this year from 7.7 million tons last year, he said.
Overseas vegetable oil purchases by India in the four months to February rose 22 percent to 3.74 million tons from 3.06 million tons a year earlier, association data showed.
Imports of all cooking oils may surge to a record 10.7 million tons in the year that started Nov. 1, Dinesh Shahra, managing director of Ruchi Soya Industries Ltd., said March 5. Purchases were 9.98 million tons last year, according to the association. The country buys palm from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.