15/12/2012 (Business Recorder) - India's cooking oil imports fell by a third in November from the previous month, a trade body said on Thursday, largely due to a drop in purchases of palm oil, as cold weather makes the commodity unusable and volatile prices deterred buyers.

India, the world's biggest importer of vegetable oils, bought in 76,519 tonnes of refined palm oil in November, the Solvent Extractors' Association (SEA) said in a statement, up from 61,544 tonnes in October, as prices eased slightly.

India's palm oil imports in October were at their highest level in at least three years, as buyers took advantage of high stockpiles, especially in Malaysia, the world's No 2 producer. A Reuters survey forecast average vegetable oil imports, including small amounts of non-edible oils, at 770,375 tonnes in November, with 72,500 tonnes of refined palm oil. Total vegetable oil imports were 700,371 tonnes.

India's vegetable oil year runs from November to October. The country buys mainly palm oils from Indonesia and Malaysia, and a small quantity of soyaoil from Brazil and Argentina. India relies on imports for more than half of its annual edible oils demand of 16 million to 17 million tonnes. The government is giving farmers incentives to spur domestic output and cut reliance on imports, which can fuel inflation.

A population growing at the rate of about 19 million people a year, along with an increasingly wealthy middle class, supports higher demand. State-owned companies import on average about 90,000 tonnes a month of refined, bleached and deodorised (RBD) palmolein for public distribution in subsidised schemes. Imports of more than 100,000 tonnes would indicate buying by private traders, putting domestic refiners at risk. Traders said shipments below this level in November should reassure the government and mean no hike in import duties. India's annual imports of refined palm oil surged 46 percent in the marketing year to October 31, as Indonesia cut export taxes to boost its processing industry. New Delhi retaliated by raising the cost of imports from August.

About 77 percent of India's edible oil imports are palm oil, with soft oils, such as soya and sunflower, making up the rest. Total palm oil imports were 614,574 tonnes last month, down 26.9 percent from the previous month's purchases, as demand shrank, with the start of cold weather that solidifies the oil. Imports of crude palm oil (CPO) were 534,556 tonnes in November, down 30.4 percent on month. "Decline in the monthly imports was mainly due to seasonal factors," said a Delhi-based trader. In October, India imported 768,336 tonnes of CPO and 61,544 tonnes of RBD palmolein, a record for monthly total palm oil imports in data going back to October 2009, according to SEA.

Imports of soft oils, such as soyaoil, also fell last month as their prices were higher, mainly due to the slow pace of soyabean planting in South America. Soyaoil imports declined by 84.6 percent to 14,160 tonnes last month. Traders forecast the monthly imports to decline for the second straight month in December on seasonal factors, although palm oil prices are showing signs of stability. "Palm oil prices are now more or less stabilised. This should not influence imports in December," said an importer based in Bangalore, who also slashed imports in November.

"Volatility in palm oil prices in September and October contributed to lower imports (in November)," the importer said, as refiners opted to clear stocks rather than buy new supplies. And with a slide in global prices, India's palm oil buyers put off some purchases for November.