24/10/2007 (Business Standard) - India, the world’s second-biggest vegetable oil buyer, may ask state trading firms to import more edible oils, rather than cut tariffs to boost local supplies, said Dorab Mistry, director at Godrej International. 
 
India cut import taxes on palm and soybean oils four times since January to boost supplies. Last week, the government asked trading firms to import 125,000 tonnes of edible oils to prevent prices from rising in the festive season that began this month. 
 
“The government seems to be concentrating on the second alternative of importing through state companies and feeding the poor,’’ Mistry, who has traded vegetable oil since 1976, said in an e-mail interview today. Godrej is one of the nation’s biggest buyers of vegetable oils. 
 
Prices of palm oil, which makes up two-thirds of India’s total cooking oil imports, reached a record 2,814 ringgit ($834) a tonne on October 16 in Malaysia, and soybean oil climbed to a 23-year high on October 18 in Chicago. India relies on imports to meet almost half its cooking oils requirement. 
 
India’s oilseeds harvest declined 15 per cent to 24 million tonnes in the year ended June from a year ago because of uneven rainfall, increasing the need to import edible oils. 
 
The country bought 4.21 million tonnes of edible oils in the 11 months ended September, 11 per cent more from a year earlier. 
 
Global vegetable oils demand in the year to September 2008 may rise by 5 million tonnes, while supply may increase by 3.9 million tonnes, Mistry said, maintaining his September forecast. 
 
Palm oil prices may climb as high as 3,000 ringgit a tonne in the year ending September 30, 2008, he said, reiterating a September 22 forecast. The contract for January delivery rose 0.4 per cent to 2,725 ringgit on the Malaysia Derivatives Exchange today. 
 
The futures have surged 65 per cent in the past year. 
 
“I am happy with the way the fundamentals have developed in the past one month,’’ he said. “I am not planning to revise my forecast.’’ Mistry is scheduled to speak at an industry conference in Bali on November 8. 

--Bloomberg--