13/05/2010 (Bloomberg) - India, the world’s second-biggest vegetable oil consumer after China, may boost imports of soybean oil by 80 percent this year as its premium over rival palm oil drops amid record global output.

Purchases may jump to 1.8 million metric tons in the year ending Oct. 31, from 1 million tons a year earlier, Govindlal G. Patel, director of vegetable oils trading company Dipak Enterprise, said in a phone interview. Overall edible oil imports may climb 6.7 percent from the previous year to 8.7 million tons, he said.

Higher imports may support soybean oil prices, which have dropped about 6 percent in Chicago this year on a record global soybean harvest. The premium of soybean oil over palm oil plunged to $66.10 a ton today, lower than the 12-month average of $129.30 a ton, according to data compiled by Bloomberg.

“Soybean oil will make up whatever increase in imports that’ll be seen this year,” Patel said. “Soybean oil is cheaper and people are taking advantage.”

Soybean futures in Chicago have fallen 8 percent this year as global output expands to a record, led by rising production in the U.S., Brazil and Argentina, the world’s top growers. China, the largest user of soybean oil, suspended purchases from Argentina last month because of quality concerns. Argentina supplies about three-quarters of China’s demand.

“India’s own soybean oil supply will be less than last year as nearly half the crop has not been crushed,” Patel said. “With China shunning Argentine supplies, it’s turned cheaper for Indians.”

Palm Imports
India is yet to crush more than 1.45 million tons of soybeans, mustard and other oilseeds, the Solvent Extractors’ Association of India said in an e-mailed statement today. Stockpiles of 10 million tons are considered normal, according to Ashok Sethia, the group’s president. Crushing has slowed because of cheaper imports and because low prices of soybean meal, used to make animal feed, have wiped out crushers’ profits.

The South Asian nation may import around 6.4 million tons of palm oil in the year to Oct. 31, compared with 6.6 million tons a year earlier, Patel said. Edible oils purchases last month slumped 18 percent to 543,252 tons from 659,477 tons a year earlier, the Solvent Extractor’s Association said today.

Vegetable oil imports, including crude palm oil, were little changed at 4.29 million tons in the six months to April, the group said. Soybean oil imports surged 73 percent to 611,877 tons from a year earlier, it said.

India buys palm oil from Indonesia and Malaysia and soybean oil from Argentina and Brazil.

Palm oil futures in Malaysia, which have dropped 6.6 percent this year, may trade between 2,470 ringgit ($772) and 2,800 ringgit a ton in the next four months, Patel said.

July-delivery palm oil fell as much as 1 percent to 2,481 ringgit a ton on the Malaysia Derivatives Exchange today. Soybean oil for July delivery in Chicago dropped as much as 0.4 percent to 38.27 cents a pound.