Veg oil imports to rebound, despite high output

Despite higher estimated domestic output, vegetable (veg) oil import in India is likely to rise six per cent this oil year (November 2011-October 2012) to bridge the deficit on growing consumer demand.

Data compiled by the Solvent Extractors’ Association (SEA) showed overall import had slumped six per cent, or 570,000 tonnes, during the 2010-11 oil year to 8.7 million tonnes, compared to 9.24 mt the previous year. B V Mehta, executive director of SEA, attributed the decline to higher availability from domestic sources on increased production of oilseeds. The import was also hit because of high prices of edible oil due to rupee depreciation. The currency was down 10 per cent against the dollar at an average of 49.20 in October 2011, against 44.75 in the corresponding month last year.

However, demand is likely to rebound on a positive economic outlook and sustained investible income at the hands of the average middle class, to take the overall import again to 9.2 mt next year, said Mehta. Overall edible oil consumption in India is currently 15.5 mt.

With an additional two mt output of soybean this kharif season, the industry is estimated to get more refined soy oil supply of nearly 300,000 tonnes. The apex trade body, the Central Organisation for Oil Industry & Trade (COOIT), has forecast 1.15 mt of soybean production this kharif season, as compared to 9.5 mt last year.

Also cottonseed output is estimated to rise this year to 11.16 mt, around 10 per cent higher than last year’s 10.07 mt last year. This will translate into 100,000 tonnes of additional output in cotton oil. This means the country will get 400,000 tonnes of additional vegetable oil output this year, assuming a normal rabi.

Meanwhile, Dorab Mistry, director of the London-based Godrej International, has forecast the crude palm oil price on Bursa Malaysia to rise 25 per cent to 4,000 ringgit from the current 3,195 ringgit on reduced production from major producing countries, including Malaysia and Indonesia. Euro zone debt problems are set to support the commodity’s upward movement, with supply and demand fundamentals offering further support for the edible oil. In case of quick price rise, the crushing parity from domestic sources turns negative, resulting in carryover oilseed stocks. In any case, veg oil import will go up, said Satyanarayan Agarwal, president, COOIT.