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Cooking oil imports by India, the world's second-largest consumer, probably climbed for a third month in February after palm oil prices tumbled and speculation of a tax increase spurred buying by refiners and traders.
Purchases of vegetable oils, including those for industrial use, jumped 11 per cent to 975,000 tonnes last month from a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Palm oil imports rose 21 per cent to 800,000 tonnes. The Solvent Extractors' Association of India will publish data this week.
Increased demand from India, the world's biggest palm oil importer, may help trim inventories in Indonesia and Malaysia, the largest producers, and stem a 26 per cent loss in futures in Kuala Lumpur over the past year.
Cooking oil consumption in India, which meets more than 50 per cent of its demand through imports, is growing four per cent to five per cent annually as the population expands 20 million every year and middle-class incomes increase, according to the extractors' association.
"People were expecting taxes to be raised in the budget, so they imported heavily," Sandeep Bajoria, chief executive officer of Mumbai-based Sunvin Group, said by phone. "Demand is growing in India and every year we are likely to import at least 800,000 tonnes more than a year ago."
India, which imposed a 2.5 per cent tax on unprocessed oils in January while doubling the benchmark price to calculate the tariff, left the levies unchanged in the annual budget on February 28. Still, the government is poised to increase the taxes at least twice later this year, according to Dorab Mistry, director at Godrej International Ltd.
Swelling inventories
The contract for delivery in May was unchanged at 2,448 ringgit ($787) a ton on the Malaysia Derivatives Exchange at the 12:30 pm break in Kuala Lumpur today. Futures fell 6.3 per cent in February, the most since September, on concern that stockpiles among top producers may stay near record levels because of falling demand.
Malaysian inventories fell 5.2 per cent to 2.44 million tons in February from a month earlier as production declined 19 per cent to 1.3 million tons, the nation's palm oil board said.
Indian reserves, including those at ports and in the pipeline, probably rose to a record 1.8 million tons at the start of this month, Bajoria said. Stockpiles may total almost 2 million tons, about 80 percent more than a year earlier, according to Mistry. India buys palm from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.
Ports full
"Imports will slow down from March as stockpiles are high and the ports are full," said Pradip Desai, managing director of Mumbai-based broker Palmtrade Services Pvt.
Imports of all cooking oils may surge to a record 10.7 million tons in the year that started November 1, Dinesh Shahra, managing director of Ruchi Soya Industries Ltd, said on March 5. Purchases were 9.98 million tons last year, according to the association. Palm oil imports may climb to an all-time high of 8.5 million tons this year, he said.
Crude soybean oil imports fell 4.5 per cent to 75,000 tons in February from a year earlier, while sunflower oil purchases may have fallen 28 per cent to 80,000 tons, the survey showed.
