MUMBAI (Reuters) - India’s palm oil imports in 2018/19 are likely to jump 8.7 percent from a year earlier as consumption in the world’s biggest edible oil consumer will expand amid a drop in local supplies, a leading industry analyst said on Wednesday.
The rising imports may help support benchmark Malaysian palm oil prices that have been trading near their lowest in three years.
Palm oil imports for the 2018/19 marketing year starting on Nov. 1 will rise to 9.26 million tonnes, said Govindbhai Patel, managing director of trading firm G.G. Patel & Nikhil Research Company. The imports will rise as lower rainfall has reduced local edible oil production.
“Rainfall during 2018 was very erratic. In some states, there was excess rain and in some states, it was very deficient. It hit groundnut and cotton,” said Patel
India has received 9 percent lower rainfall than normal so far during the current monsoon season that started on June 1, the Indian Meteorological Department said on Tuesday. However, Gujarat, the country’s biggest producer of groundnut, also known as the peanut, and cotton, had a 27 percent rainfall deficit, the IMD said.
In the 2018/19 marketing year, India’s edible oil demand is pegged to rise by 2.1 percent to 22.6 million tonnes, while local supplies could ease by 6.2 percent to 7.25 million tonnes, Patel told a conference.
The country’s groundnut oil, cottonseed oil and rapeseed oil supplies could shrink next year, while rice bran oil supplies could marginally rise, said Patel, who has been trading edible oil for over four decades.
This production drop will lift soyoil imports by 5.8 percent to 3.3 million tonnes in the next marketing year, while sunflower oil imports could ease to 2.4 million tonnes from the record high of 2.51 million tonnes in the current year, he said.
India buys palm oil from Indonesia and Malaysia, with its soyoil mainly imported from Argentina and Brazil. It purchases sunflower oil from Ukraine.
The South Asian country’s total edible oil imports could rise to a record high of 15.2 million tonnes in 2018/19, up 5.6 percent from a year earlier, Patel said.
India’s edible oil consumption growth faltered in the current year to 1.75 percent from 4.5 percent a year ago, but it could rebound to 2.1 percent in the coming year, Patel said.
Palm oil accounts for more than half of India’s total edible oil imports. India’s palm oil imports in the 2017/18 marketing year ending on Oct. 31 are estimated to drop 8.3 percent to 8.52 million tonnes due to higher prices, he said.
India raised the import tax on palm oil and other edible oils to the highest in over a decade to support local oilseed farmers.[ nL4N1TG4W0]
The country’s soybean production is expected to jump by 20.5 percent in 2018 to 10 million tonnes as farmers expand the cultivation of the oilseed, he said.
Reporting by Rajendra Jadhav and Emily Chow; Editing by Christian Schmollinger