12/07/2010 (International Business Times) - India's vegetable oil imports in June probably fell 18 percent from a year ago, as farmers and traders sold oilseed reserves ahead of the summer planting season, pushing down domestic prices.

Palm oil imports by India, the world's top buyer of edible oils, dropped 2 percent, while soyoil imports fell 42 percent as the planting of soybean, main summer season oilseed crop, started with the progress of the monsoon season.

India's vegetable oil imports, including non-edible oils, in June are estimated to have fallen to 637,500 tonnes from 780,679 tonnes a year ago.

Trade body the Solvent Extractors' Association of India is expected to release the import data later this week.

An average forecast of eight traders showed India may have imported 607,500 tonnes of edible oil in June, down 18 percent from a year earlier, but 13 percent higher than imports in May as monthly purchases recovered ahead of the festival season.

India's festival season starts in August with the Muslim holy month of Ramadan and ends with the Hindu festival of Diwali in November.

"Festive demand will keep buying interest alive until September," said Sandeep Bajoria, chief executive of trading firm Sunvin Group and a former head of the Central Organisation for Oil Industry and Trade. However, imports are expected to shrink thereafter as India may see a rise in domestic supply in a few months.

Good rains in the past two weeks have boosted sowing and increased the area under oilseed cultivation to 2.9 million hectares on July 2 from 1.1 million hectares a year ago. Monsoon rains, vital for the farm-dependent economy, entered soybean and groundnut areas of central and western India last month, and traders say planting of soybean would be completed this week.

"Eighty percent of the sowing is already done," a trader in the central Indian city of Indore said. The survey showed average estimated annual stocks at Indian ports at the end of June fell by 30 percent due to lower imports in the previous month. Estimates ranged from 400,000 tonnes to 550,000 tonnes. Lower imports and prospects of higher domestic supply may put pressure on Malaysian crude palm oil futures. India mainly buys palm oil from Indonesia, Malaysia, and a small quantity of soyoil from Brazil and Argentina.

Last year, the worst drought in 37 years hit India's oilseed output, helping the country overtake China as the world's biggest importer of cooking oils. An average palm oil futures to stay unchanged in the second half of this year and in 2011 at 2,500 ringgit a tonne as ample supplies of rival soyoil cap demand. Malaysian crude palm oil rose to a one-week high of 2,326 ringgit ($727.3) on Monday, buoyed by strong trade performance by China and lower-than-expected stocks.