3/2/06 NEW DELHI (Reuters) - Thurs: Edible oil imports by India, the world's largest buyer, are likely to decline by 21 per cent in the first quarter of 2006 because of strong domestic supplies, a top industry official said today.

The country is expected to buy around 850,000 tonnes of vegetable oils during the January to March period, down from 1.07 million tonnes a year ago, Sandeep Bajoria, president of the Central Organisation for Oil Industry and Trade said in an interview.

"Our winter oilseed crop was better than last year and summer crop is progressing very well," he said. "Imports of both palm and soyabean oils will fall."

India, which imports 40 per cent of its annual edible oil requirement of 11 million tonnes, is the world's fourth-largest vegetable oil producer. The country buys palm oil from Malaysia and Indonesia and soyaoil from Brazil and Argentina.

The global vegetable oil industry watches the oil organisation's estimates closely as India's domestic oilseed output impacts on vegetable oil imports.

Bajoria said palm oil imports were likely to take a bigger hit with shipments during the quarter expected to fall to around 500,000 tonnes from around 685,000 tonnes.

"Major impact will be on palm oil imports as palm prices have been on the higher side compared with soyaoil."

Soyaoil imports are forecast to decline to 325,000 tonnes from 358,000 tonnes, he said.

Landed cost of crude palm oil, including the import duties, has risen to US$773 (US$1 = RM3.75) per tonne in the last year from US$677 per tonne. But the cost of degummed soyaoil has fallen to US$693 per tonne from US$800 a tonne.

"Our soyaoil imports have become cheaper than palm oil for the first time as global prices of soyaoil have fallen and we charge a lower duty on soyaoil," said B.V. Mehta, executive director of Solvent Extractors' Association of India.

Crude soyaoil carries a flat 45 per cent duty, crude palm oil and crude palm olein are taxed at 80 per cent, while RBD palm olein from Malaysia faces a levy of 90 per cent.

India's oilseed output in the year to September 2006 is forecast at 23.51 million tonnes, compared with 21.93 million tonnes in the previous year, the organisation said in its first advance estimates last month.

The summer crop is forecast to be 10.14 million tonnes, 6 per cent up from 9.57 million tonnes in the previous summer.

India grows two oilseed crops, mainly soyabean and groundnut in the winter season, and rapeseed and groundnut in the summer season. Winter crops are sown in June and harvesting begins in September, while summer crops are grown between November and March.

The June-September monsoon season usually impacts both winter and summer crops. Rainfall in 2005 was normal at 99 per cent of the long-term average. - Reuters