With edible oil prices remained under pressure due to surplus availability from the world's two leading producers - Malaysia and Indonesia - India's per capita consumption of cooking oil is set to increase 4.19 per cent in the current financial year.
Price-sensitive low strata consumers that constitute around 40 per cent of India's edible oil demand are set to consume over 400,000 tonnes more of cooking oil this year, resulting in its demand per capita rising to 13.92 kg, compared to 13.36 kg last year.
This, along with the continuous focus of the affluent class to concentrate more on outside foods, which is generally considered rich in oil, would raise India's overall consumption of cooking oil to 17.55 million tonnes (mt) this year, a rise of around 1 mt, or six per cent, from the overall usage of the previous year.
"We expect India's per capita edible oil consumption to continue to rise this year in the wake of sustained positive growth in the country's economy. Also, price-sensitive consumers continued their excessive consumption even this year, resulting in higher per capita consumption in the country," said Dorab Mistry, director, Godrej International, and a global voice in the edible oil industry
With an estimated crude palm oil (CPO) production of 19.5-19.7 mt in Malaysia and around 30.5 mt in Indonesia, a large quantity of around 6 mt of surplus oil is expected to be available for world consumption for the current year. Large tracts of palm plantations in Thailand, Central America, Colombia and Africa would also come into maturity in 2013. As a result, total palm oil production in 2013 is set to grow about 3.9 mt globally.
CPO prices in the benchmark Bursa Malaysia market remained under pressure, quoting at around 2,400 Malaysian ringgit ($775), which is expected to decline further to 2,200 ringgit by the end of June. Breaching this level, however, would take this price further down to 1,800 ringgit, said Mistry.
"Favourable climatic condition, however, has increased oil content in seed with an average 42 per cent this year from 38 per cent last year. This would increase the overall oil availability from domestic sources to 8.20 mt this year from 8.15 mt in the previous year," said B V Mehta, executive director of the apex trade body, Solvent Extractors' Association.
Mistry estimates India's edible oil production at 7.1 mt this year, a marginal rise from 6.8 mt in the previous year.
Still, according to Mistry, India would require record veg oil imports to meet its burgeoning deficit. According to him, India's veg oil imports would rise to 10.9 mt to set a new record this year, compared to 10.2 mt last year. Rising import dependence may escalate India's swelling current account deficit which has been a major concern for India's political think tank, he added.