BOMBAY (March 27 2003) : India, the world's largest edible oil importer,has increased palm oil buying for April arrival cargoes but is avoidingsigning long-term contracts on concerns the war in Iraq could beprolonged.

In the past 10 days, Indian importers have contracted to buy about 80,000tonnes of palm oil for April arrival, traders said on Wednesday, addingthat the country imported just 160,000 tonnes in the entire month ofFebruary.

"There has been a rise in fresh bookings as local demand is good andstocks have fallen to one of the lowest levels in the past four years,"said a trader with a global trading firm.

Traders estimated the country's edible oil stocks at 500,000 tonnes, muchlower than its monthly requirement of more than 800,000 tonnes. Indianormally maintains an inventory of nearly a month's edible oilconsumption.

India imports palm oil mainly from Malaysia and Indonesia and soy oil fromArgentina and Brazil to meet nearly half its annual oil demand of about 10million tonnes.

Traders said India was likely to import about 450,000 tonnes of edibleoils in March, including 100,000 to 125,000 tonnes of soy oil, and about480,000 tonnes in April, traders said.

It had imported 227,000 tonnes and 368,000 tonnes of edible oils in thetwo respective months of the previous year.

"Local supplies are drying up fast due to poor oilseed output in winter,"said a Bombay-based trader, adding even oil supply from the summer cropwould be limited to some parts of the country.

Mustard, harvested in March and April, is the chief summer oilseed and isgrown mainly in northern and eastern India.

India's oilseed output in the year to October 2003 is expected to drop to16.13 million tonnes from 20.24 million tonnes in the previous year due topoor monsoon rains, according to trade estimates.

But importers are avoiding signing contracts for arrival after Aprilbecause of uncertainties about global prices and freight rates in view ofthe war in Iraq, traders said.

Rates for shipping palm oils to western Indian ports from Malaysia andIndonesia had gone up by about four dollars a tonne to $24 a tonne, andcould rise further if the war in Iraq drags on, they said.

Malaysia's palm oil futures were mostly lower by midday on Wednesday, withthe benchmark June contract falling 10 ringgit to 1,381 ringgit ($363.42)a tonne after trading as high as 1,395 ringgit due to overnight gains inChicago soy futures.- Reuters