April 6, 2012

Malaysia boosted by increased Indian cooking-oil imports

A surge in Indian imports for a second month may boost palm oil prices in Kuala Lumpur, Malaysia, and increase profits for producers, including Sime Darby Bhd.

"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 tonnes in the year ending, June 30 from 32.48 million tonnes a year earlier, according to India's farm ministry. That may boost vegetable-oil imports as much as 9.5 million tonnes in the year ending October 31, he said. The country bought 8.7 million tonnes last year, according to the extractors' association.

Purchases may average 850,000 tonnes to 950,000 tonnes a month until October, Bajoria said. Imports increased 59% in February to 875,649 tonnes, the extractors' association said on March 14. Imports of palm oil from Indonesia and Malaysia make up almost 80% of India's cooking-oil purchases.

Palm oil for June delivery ended the morning session little changed at MYR3,560 (US$1,162) per ton on the Malaysia Derivatives Exchange. Futures rose 5% in March, touching MYR3,574 (US$1,166) 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% on the National Commodity & Derivatives Exchange Ltd. in Mumbai this year, more than the 18% gain in Chicago.

Imports were also fuelled by concerns that the government may raise taxes, Ashok Sethia, executive director at Sethia Oils Ltd. Finance Minister, Pranab Mukherjee left the import duty on refined oils unchanged at 7.5% in his annual budget speech on March 16.

Refined cooking oils bought overseas were about US$30 a tonne cheaper than domestic supplies, Sunvin's Bajoria said.

Soybean oil imports rose to 150,000 tonnes in March from 81,131 tonnes a year earlier, while sunflower oil purchases climbed to 100,000 tonnes from 76,230 tonnes, the survey showed. Stockpiles at Indian ports fell to about 650,000 tonnes as of April 1 from about 840,000 tonnes in March, Bajoria said.