NEW DELHI: India's soyoil imports are expected to drop in 2014/15, as the world's top importer is set to harvest a bumper soybean crop aided by a late surge in the monsoon rains, traders said on Friday.
The lower imports due to a forecast rise of nearly a fifth in India's domestic soyoil production could worsen an expected global glut of the oil due to better soybean crop conditions in the United States. That will weigh on soyoil prices which are already down 20 percent this year.
India, the world's fifth-biggest soybean producer, is set to harvest a higher output of the oilseed than last year despite a lower acreage as the late surge in the monsoon has boosted prospects of higher yields. Soyoil is extracted from soybean after deriving meal, which is used as an animal feed.
"Local soyoil supplies are expected to rise around 300,000 tonnes next year," said Faiyaz Hudani, associate vice president at brokerage Kotak Commodity Services.
India consumes about 3.2 million tonnes of soyoil with local supplies sharing half of the demand with the rest met mainly via imports from Brazil and Argentina.
In India, soyoil is preferred as cooking medium to rival palm oil for serving high-calorie fried foods on special events such as marriages and festivals.
India is the world's leading vegetable oil importer, with purchases of around 11 million tonnes in 2013/14. Half of those imports are of palm oils from Indonesia and Malaysia, while the rest are soft oils, including sunflower from Ukraine.
India's annual demand for vegetable oils stands around 17-18 million tonnes.
Hudani of Kotak also said the extent of overseas purchases of soyoil would depend on the price difference with close substitute sunflower oil.
On India's west coast on Friday, imported soyoil was quoted around $845 a tonne, while palm oils ranged from $730 to $755 a tonne and sunflower oil at $840 a tonne.
Traders expect an annual 15 percent rise in soybean output to 10.5 million tonnes in the crop year from July, riding on healthy monsoon spread over the growing belt of central India.
Local soyoil supplies are expected to be 1.9 million tonnes in 2014/15 as against 1.6 million tonnes in 2013/14, they added.
"Rains at regular intervals with ample sunshine during the maturity phase have raised hopes for better soybean yields this year," said Sandeep Bajoria, the chief executive of Mumbai-based trading company Sunvin Group.
Last year's poor yields from the soybean crop resulted in record soyoil imports in any single month since India allowed free imports of the vegetable oil two decades ago.
In August 2014, India's vegetable oil imports hit a record 1.3 million tonnes, helped by the highest ever imports of 350,373 tonnes of soyoil on expectations of a poor soybean harvest.
This year, a poor start to the monsoon season had delayed the sowing of soybean by three weeks, though a late revival of the summer rains during the second half of the June-September season boosted its output outlook.
India's soybean harvest will be delayed by a month, pushing back new-crop soymeal shipments until November to traditional buyers in Southeast Asia where the supplies from the South Asian nation are preferred as animal feeds.
Despite the likely higher domestic soyoil supplies, India's overall edible oil imports next year could surge to a record 13 million tonnes, traders said, gaining from lower global prices, rising population and boost to consumption from higher incomes. - Reuters
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