BackCooking oil imports seen to rise as area under oilseeds drops
Cooking oil imports seen to rise as area under oilseeds drops
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New Delhi: India’s cooking oil imports may surge this year, straining global supplies, as dry weather curbs oilseed planting and some farmers shift to wheat and barley to benefit from soaring prices, analysts and traders said.
Overseas purchases by the world’s second biggest buyer of edible oils may gain 15% in the 12 months ending 31 October, compared with a year earlier, according to the median estimate in a survey of six traders and analysts by Bloomberg.
An increase in imports may further deplete global stockpiles of palm oil, supporting prices that have risen 64% in the past year.
Soya bean oil has jumped 72% in the same period on concerns that supplies, reduced by a shift in US acreage from soya beans to corn, will trail demand.
“Palm oil will get support as that’s the cheapest commodity available," said Amol Tilak, an analyst at Kotak Commodity Services Ltd, on Wednesday. The country’s cooking oil imports may rise to 5.4 million tonnes (mt) this year from 4.7mt last year, the survey showed.
The imports, second only to those of China, are increasing at a time when there’s going to be a shortage in supplies of oilseeds globally, Tilak said. Rising incomes are boosting demand for fried food and snacks in China and India, while vegetable oils are also sought for biofuels.
Palm oil for April delivery on the Malaysia Derivatives Exchange, the most-active contract, gained 3.1% to 3,211 ringgits (Rs38,725) a tonne. Stockpiles in Malaysia dropped 7% in December from the previous month after production slumped.
Farmers in India reduced sowing of oilseeds mainly because of depleted soil moisture in Rajasthan as rain-fed fields suffer from a prolonged dry spell, the agriculture ministry had said on 18 January. The area under winter-sown oilseeds declined 10% to 8.55 million hectares (ha) from 9.5 million ha a year earlier. Barley was sown on 7.25 million ha, 12% more than a year earlier, the ministry said.
“It’s all market-driven and at the time of sowing, barley looked more lucrative to grow than mustard and that’s why farmers shifted," Unupom Kausik, head of research at Anagram Commodities Ltd, said on Wednesday.
Mustard oil is the third-most used cooking oil in India and accounts for more than 70% of the nation’s output of winter-sown oilseeds. Mustard output may fall as low as 5mt from 6.22mt, Govindlal G. Patel, director of Dipak Enterprises, said. Patel has been trading cooking oils for more than three decades.
Farmers in Rajasthan, the country’s biggest mustard seed grower, produce an average of 1.25 tonnes of the oilseed per ha, compared with 2.42 tonnes of barley, according to government data.
Higher grain prices in India have also prompted some farmers to switch to wheat and barley at the expense of mustard seed.
“Farmers are shifting as they are getting better prices from private companies for barley," H.B. Yadav, an additional director for agriculture with the government of Rajasthan, said.
As Indians become more affluent, consumption of beer has risen, increasing barley prices by 48% in the past year on the National Commodity and Derivatives Exchange Ltd (NCDEX) in Mumbai.
Wholesale wheat prices in New Delhi last week reached their highest since November 2006, helped by a growing appetite for bread, cakes and biscuits among the 1.1-billion population.
Barley prices may rise 16% to Rs1,400 per 100kg by September on NCDEX on rising demand from the drinks industry, Harish Galipelli, head of research at Karvy Comtrade Ltd, said.
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