10/2/06 (Reuters)  -  SOYAOIL from South America is set to upstage rival palm oil imports to India due to lower prices and customs duties, and analysts predict tough times for the traditional cooking medium.

Soyabean oil inflows into India this month are expected to almost match palm oil shipments, traders and analysts said, as soyaoil imports have become cheaper than palm oil for the first time.

India, which imports 40 per cent of its annual edible oil requirement of 11 million tonnes, is the world’s second-largest edible oil importer. It buys palm oil from Malaysia and Indonesia and soyaoil from Brazil and Argentina.

Palm oil has enjoyed a dominant 70 to 80 per cent market share of imported vegetable oils over the past several years in India.

Landed cost of crude palm oil, including the import duties, has risen to US$749 (US$1 = RM3.73) per tonne this month from US$692 a tonne a year ago. But the cost of degummed soyaoil has declined to US$718 per tonne from US$738 a tonne.

“Palm oil supplies are getting choked,” said a commodities analyst based here. “Palm imports are slipping every month and will definitely go down further in February.” Crude soyaoil carries a flat 45 per cent duty, while crude palm oil and crude palm olein are taxed at 80 per cent and RBD palm olein from Malaysia faces a levy of 90 per cent.

“We don’t have love lost for any oil. Right now imported soyaoil costs US$31 cheaper than palm oil, so imports of soyaoil are rising,” said B. V. Mehta, executive director of Solvent Extractors’ Association of India.

Palm oil made inroads into India in early 2000 as a cheap alternative to costlier domestic oils before New Delhi began revising taxes to protect local farmers.

Soyabean oil and palm together account for more than 80 per cent of the annual world edible oil trade of 40 million tonnes.

Analysts said soyaoil prices are expected to slip further in coming months with forecasts of a good soyabean crop in leading producers Brazil and Argentina. And palm oil runs the risk of rising US$20 a tonne with strong demand from other destinations.

“The going will get even tougher for palm oil exporters,” said a Mumbai-based oil industry official.

Imports of degummed soyaoil are estimated to have more than doubled to around 100,000 tonnes in January from 47,100 tonnes in December, while palm oil shipments have declined to 115,000 tonnes from 158,021 tonnes in the same period, according to industry calculations.

Soyabean oil suits the palate of consumers in India, which grows only soft oils like groundnut, soyabean, rapeseed and sunflower. — Reuters