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Cooking-Oil Imports by India Fall as Rupee Drop Deter Buyers

12 Jul 2012

Cooking-oil purchases by India, the world’s biggest consumer after China, probably dropped for the first time in five months in June after a plunge in the rupee to a record low deterred importers. Futures in Malaysia tumbled.

Shipments slid to 850,000 metric tons last month from 862,550 tons a year earlier, according to the median estimate in a Bloomberg survey of five processors and brokers. Imports ofcrude and refined palm oil declined 16 percent to 600,000 tons from 712,356 tons, the survey showed. The Solvent Extractors’Association of India will publish shipment data next week.

Palm oil, used in candy and fuel, has slumped 17 percent from a 13-month high in April on concerns that a slowdown in China and the European debt crisis may curb demand. Lower Indian imports may boost inventories in Malaysia, second-largest palm oil supplier, as production enters the peak period. The rupee sank to a low of 57.3275 to a dollar on June 22, raising the cost of commodities priced in the U.S. currency.

“The rupee depreciation made imports expensive and kept importers away,” said Sandeep Bajoria, chief executive officer of Mumbai-based brokerage Sunvin Group. “Buyers were also holding back purchases to take advantage of the lower Indonesian export tax in July.”

Indonesia cut the tax rate for exports of crude palm oil in July to 15 percent, a level last seen in January, from 19.5 percent in June, Deddy Saleh, director general of foreign trade at the Trade Ministry, said June 25. The base price to calculate the levy was cut to $944 a ton from $1,098, he said.

Monsoon Delay

Palm oil for September-delivery fell as much as 2.8 percent to 2,995 ringgit ($940) a ton, the biggest loss for the most-active contract since June 14, and ended the morning session at 3,007 ringgit. Futures rose to a 13-month high of 3,628 ringgit on the Malaysia Derivatives Exchange on April 10.

A surge in imports in the past four months lifted cooking-oil inventories including those at Indian ports to a record 1.7 million tons last month, according to the extractor’s association. Stockpiles may be about 1.6 million tons as of July 1, Sunvin’s Bajoria said.

Purchases will increase in the next four months as the worst start to the monsoon in three years delays soybean and peanut sowing, he said. Imports will be between 800,000 tons and 900,000 tons a month until October, Bajoria said.

The area under oilseeds dropped to 2.65 million hectares (6.5 million acres) as of July 6 from 3.73 million hectares a year earlier, according to the farm ministry. Soybean planting was 26 percent lower at 1.89 million hectares, it said.

Dwindling Supplies

Imports in the seven months through May jumped 32 percent to 5.61 million tons, according to the extractors’ association. India bought 8.7 million tons in 2010-2011. Purchases will climb to 9.7 million tons this year as local supplies are set to decline to 6.65 million tons from 7.25 million tons, GG Patel & Nikhil’s managing partner Govindlal G. Patel, who has traded edible oils for more than three decades, said last month.

Crude soybean-oil imports probably surged to 125,000 tons in June from 50,616 tons a year earlier, while sunflower-oil purchases may have risen to 110,000 tons from 50,560 tons, the Bloomberg survey showed.