BLBG:Cooking-Oil Imports by India Surge on Local Prices, Tax Concern
Cooking-oil imports by India, the world’s biggest palm oil buyer, probably more than doubled in March as high domestic prices and speculation that taxes will be increased in the annual budget spurred buying.
Purchases climbed to 900,000 metric tons from 435,735 tons a year earlier, according to the median estimate of five processors and brokers surveyed by Bloomberg News. Imports of crude and refined palm oil surged to 650,000 tons from 253,727 tons, the survey showed. The Solvent Extractors’ Association of India is scheduled to release the data on April 13.
The increase in Indian imports for a second month may help palm oil in Kuala Lumpur extend a rally from the highest price in more than a year, boosting profits for producers including Sime Darby Bhd. (SIME) Futures rallied 12 percent this year on concern that global cooking-oil supplies may decline as drought curbs soybean output in Brazil and Argentina.
“The main reason for the increase in imports is that our local crops have not been very good,” said Sandeep Bajoria, chief executive officer of Sunvin Group, a Mumbai-based commodities trader. “The rapeseed crop is lower and local prices are higher than the global prices.”
India’s oilseeds production may drop to 30.5 million tons in the year ending June 30 from 32.48 million tons a year earlier, according to India’s farm ministry. That may boost vegetable-oil imports as much as 9.5 million tons in the year ending Oct. 31, he said. The country bought 8.7 million tons last year, according to the extractors’ association.
Malaysia, Indonesia
Purchases may average 850,000 tons to 950,000 tons a month until October, Bajoria said. Imports increased 59 percent in February to 875,649 tons, the extractors’ association said on March 14. Imports of palm oil from Indonesia and Malaysia make up almost 80 percent of India’s cooking-oil purchases.
Palm oil for June delivery ended the morning session little changed at 3,560 ringgit ($1,162) per ton on the Malaysia Derivatives Exchange. Futures rose 5 percent in March, touching 3,574 ringgit yesterday, the highest price since March 2011.
“Imports of edible oil are rising as crushing has been low in India because the price on commodity exchanges is much higher than the spot prices,” said Atul Chaturvedi, chief executive officer of Adani Wilmar Ltd.
India barred commodity exchanges from offering new contracts in soybeans to curb speculation after futures had the biggest monthly gain in more than three years in March. Futures jumped 24 percent on the National Commodity & Derivatives Exchange Ltd. in Mumbai this year, more than the 18 percent gain in Chicago.
Tax Concerns
Imports were also fueled by concerns that the government may raise taxes, Ashok Sethia, executive director at Sethia Oils Ltd., said by phone from Kolkata. Finance Minister Pranab Mukherjee left the import duty on refined oils unchanged at 7.5 percent in his annual budget speech on March 16.
Refined cooking oils bought overseas were about $30 a ton cheaper than domestic supplies, Sunvin’s Bajoria said.
Soybean oil imports rose to 150,000 tons in March from 81,131 tons a year earlier, while sunflower oil purchases climbed to 100,000 tons from 76,230 tons, the survey showed. Stockpiles at Indian ports fell to about 650,000 tons as of April 1 from about 840,000 tons in March, Bajoria 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
