05/08/2009 (Bloomberg) - Edible oil imports by India, the world’s biggest buyer after China, probably declined in July after record purchases this year boosted domestic stockpiles.

Purchases were 490,000 tons, compared with 532,456 tons a year ago, said Govindlal G. Patel, director of Dipak Enterprise. Imports included 400,000 tons of palm oil and 50,000 tons of crude soybean oil, said.

Palm oil has advanced 38 percent this year amid speculation that drought in Argentina may curb soybean oil supplies, stoking demand for the tropical commodity, the main substitute. India’s edible oil purchases may total at least 1.86 million tons in the three months to Oct. 31 as demand rises and below average rains force oilseed growers to plant fewer acres, Patel said.

“Imports will continue in big quantities in coming months as inadequate rainfall will lead to lower oilseeds production,” said Patel, a vegetable-oils trader for more than four decades. Palm oil will account for 90 percent of the purchases, he said.

Imports surged 79 percent to 5.82 million tons in the eight months ended June 30 after the government waived tax on imports, the Mumbai-based Solvent Extractors’ Association of India said.

India relies on overseas purchases to meet almost half its cooking oil demand. It buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.

October-delivery palm oil added as much as 2.3 percent to 2,357 ringgit a ton on the Malaysia Derivatives Exchange today. The most-active contract closed at 2,333 ringgit a ton.

Rival soybean oil is 26 percent more expensive than palm oil, according to Bloomberg data. The landed cost of soybean oil is 8,000 rupees a ton higher than imported palm oil, Patel said.

“The U.S. won’t be in a position to make for the drop in soybean oil supplies from Latin America,” he said. “Palm oil will benefit from the tightness in soft oil supplies.”

Palm oil may advance to 2,600 ringgit ($743) a ton by the end of September as the peak production season in Indonesia and Malaysia, the biggest producers, draws to an end and soybean oil supplies from Latin America wane, Patel said. The commodity may drop to 2,000 ringgit a ton, Dorab Mistry, director of Godrej International Ltd., said yesterday in Istanbul.