India’s imports of edible oil fell 19% in September from August’s record as refiners curtailed purchases of palm oil by 26% after inventories jumped to a record, five dealers told Reuters.
Lower purchases by the world’s biggest importer of vegetable oils could lead to higher stocks of palm oil in key producers Indonesia and Malaysia, weighing on benchmark futures.
India’s total edible oil imports in September fell to 1.5 million metric tons, including 830,000 tons of palm oil, average estimates from dealers show.
‘Edible oil inventories have gone up to all-time high levels because of record imports in July and August,’ said Rajesh Patel, managing partner at edible oil trader and broker GGN Research.
‘That’s why buyers are taking a pause now.’
Domestic stocks of vegetable oil jumped to 3.7 million tons by Sept. 1 from 2.4 million a year ago, says trade body Solvent Extractors’ Association of India (SEA), which is likely to publish its data on September imports by mid-October.
Sunflower oil imports fell by 15% from a month earlier to stand at 310,000 tons, while soyoil imports edged up 2% to 365,000 tons, dealers estimated.
India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.
‘Drier weather in June and August, coupled with a slow start to planting, raised concerns about domestic oilseeds production,’ said Ashwini Bansod, head of commodities research at Phillip Capital India Pvt Ltd.
‘This led to higher import demand in July and August ahead of festivals.’
But improved rainfall in September eased concerns about a sharper decline in oilseed output, the analyst added.
August was the driest month on record with a 36% deficit in rainfall, though it revived in September for India to receive 13% more than the normal.
Imports of edible oil could fall further in October as stocks are more than enough to cater to festival season demand, said Patel of GGN Research.
This article has been republished from The Economic Times