Mumbai: Vegetable oil demand growth in India, the biggest buyer after China, may slow from a record pace fuelled by an import tax waiver that pared costs and stoked consumption in Asia’s third biggest economy.
Demand may increase 4% in the year beginning 1 November, from a record 11.5% this year, said Govindlal G. Patel, director of Dipak Enterprises. Edible oil purchases may be 7.8 million tonnes (mt), less than the 8 mt estimate, he said.
“This may be a one-time growth in consumption and we can’t expect such exorbitant growth in consumption in 2009-10,” Patel told an industry conference in Mumbai on Sunday. He has been trading vegetable oils for four decades.
India, which relies on imports to meet half its cooking oil requirements, ended import duty on crude palm oil in April last year, and in March lifted a 20% tax on crude soya bean oil purchases. The two commodities are substitutes. Refined edible oils are taxed at 7.5%.
Vegetable oil imports in the 10 months ended August jumped 49% to 7.07 mt, the Solvent Extractors’ Association of India said on 11 September. Purchases may reach 8.5 mt by 31 October, 2.2 mt more than a year ago, Patel said.
Imports in the 2009-10 season may total 8.4 mt, including 600,000 tonnes of non-edible fats, he said. That’s in line with 8.5 million forecast by the extractors’ association.
India buys palm oil from Indonesia and Malaysia, and soya bean oil from Argentina and Brazil.
Oilseeds output in the 2009-10 season may be little changed at 22.4 mt as increases in soya bean and rapeseed output help make up for a 14% drop in peanuts, Patel said.
Soya beans production may rise by 500,000 tonnes and rapeseed output may increase by 500,000-600,000 tonnes, he said.
Edible oil supplies from local oilseed harvests may rise to 6.86 mt next season, compared with 6.35 mt last year, Patel said. Stockpiles on 1 November may be 1.17 mt, 48% more than a year earlier, he said.