15/02/2010 (Bloomberg) - Vegetable oil imports by India, the biggest user after China, climbed 10 percent in the three months ended January after a drought reduced cooking oil production and lower prices fueled demand.

Purchases in the November-January period were 2.41 million metric tons, compared with 2.19 million tons a year earlier, the Solvent Extractors’ Association of India said in an email today. Last month, imports declined to 872,395 tons from 888,102 tons a year earlier, the processors’ group said.

Shipments into India, which overtook China as the biggest palm oil buyer last year, will reach a record 9.4 million tons this season, the group said last month. Increased imports may cut Malaysia’s palm oil inventories, which eased to 2 million tons in January from the second-highest level on record in the previous month. The commodity makes up more than 80 percent of India’s cooking oil purchases.

“Increase in imports is mainly due to reduced crop coupled with lower crushing because of disparity” in the cost of local production and duty-free imports, said B.V. Mehta, executive director of the Solvent Extractors’ Association.

The nation had a 1.5 million ton cooking-oil stockpile on Jan. 31, Mehta said. The country buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.

Palm oil futures closed little changed at 2,579 ringgit ($754) a ton on the Malaysia Derivatives Exchange on Feb. 12, gaining 2.3 percent for the week. The market is closed for trading today and tomorrow because of the Lunar New Year.