Palm oil purchases by India probably rebounded from the first drop in 12 months as traders and refiners in the world’s largest buyer increased shipments to bridge a widening cooking oil shortfall.
Imports climbed 4 percent to 686,000 metric tons in January from a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Overseas purchases fell 5.8 percent in December, the first decline since the end of 2014. Total vegetable oil purchases climbed 14 percent to 1.25 million tons last month. The Solvent Extractors’ Association of India releases data in the middle of the month.
India, which depends on overseas supplies to meet 70 percent of its cooking oil needs, is boosting purchases after the first back-to-back shortfall in monsoon rainfall in three decades trimmed its oilseed harvest. Rising Indian appetite for palm oil may help futures in Kuala Lumpur extend gains from a 21-month high amid dwindling supplies from Indonesia and Malaysia, the world’s top producers.
“High level of imports will continue as the Indian crop is lower and at the same time consumption is rising,” said Sandeep Bajoria, chief executive officer of Sunvin Group, a Mumbai-based broker and consultant for oil and oilseed industry. “Palm prices are reasonable to import.”
Futures in Kuala Lumpur climbed as much as 1.4 percent to 2,632 ringgit ($632) a ton on Friday, the highest level since April 2014. Prices may climb to as high as 2,700 ringgit in the second quarter as supplies dwindle and global inventories shrink, according to Dorab Mistry, a director at Godrej International Ltd.
An expanding population and rising incomes are boosting consumption of cooking oils in India, where demand is set to surge as much as 75 percent to 35 million tons by 2025, the association estimates. Total cooking oil purchases may climb to as much as 16 million tons in 2015-16 from 14.4 million tons a year earlier, according to the association.
India’s monsoon-sown oilseed harvest is seen declining 11 percent to 12.6 million tons in 2015-16 from a year earlier, according to the Central Organisation for Oil Industry & Trade. The country buys palm oil from Indonesia and Malaysia and soybean oil from the U.S., Brazil and Argentina.
Soybean oil imports probably surged 89 percent to 425,000 tons in January from a year earlier, while sunflower oil purchases dropped 25 percent to 117,000 tons, according to the survey. Canola oil purchases were 25,000 tons, the survey showed.
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