March 14, 2008

 

India diverts soy oil consignments to China on higher value

 

 

Indian soy oil importers have been diverting consignments to China due to higher realisation, which has stirred domestic concerns on tight supplies in four months to July.

 

India's soy oil May futures prices in the National Commodity and Derivatives Exchange had been trading at more than 10 percent discount on March 3, compared to same month futures in China's Dalian Commodity Exchange.

 

Dinesh Shahra, managing director of Ruchi Soya Industries Ltd, said that Indian prices of soy oil are US$100 per tonne cheaper than global prices, making the diversion to China attractive.

 

Shahra said that at least two vessels carrying 32,000 tonnes of soy oil originally destined to India have been diverted to China.

 

Skyrocketing global prices are also discouraging Indian buyers from entering into fresh deals in soy oil, raising concerns about supplies from April onwards.

 

Shahra explained that the months of April to July may spell huge constraints as China would need to import, and India would be through with its domestic crop and would have to import while freights go up.

 

India's soy oil imports are projected to pick up in April-July period when availability of local soy falls.

 

India's crushing season begins in November, after soy crop arrival in October. A large part of India's 2007/08 soybean has already been harvested.

 

The Solvent Extractors' Association, a leading trade body, said India imported 667,878 tonnes of soy oil in the four months up to July last year. This is more than 35 percent of total edible oil imports in the period.

 

India imports about 40 percent of its annual edible oils requirement of about 13 million tonnes, mostly in the form of palm oil from Malaysia and Indonesia and soyoil from Argentina and Brazil.