India's palm oil imports are set to drop 6 percent in the year to October 2014, with buyers opting for rival soybean oil as the price spread between the two narrows, traders said on Monday.
Lower overseas purchases by the world's top importer of vegetable oils could cap benchmark palm prices that jumped to a 17-month high earlier in the day, adding to February's gains - the biggest monthly rise since October 2013.
Crude palm oil is being offered at $940 to $945 a tonne, including cost, insurance and freight (CIF), in India, at par with the price of degummed soybean oil, traders said on the sidelines of an industry conference in Kuala Lumpur.
Palm oil usually trades at a discount of $100 to $150 a tonne to soybean oil but last month's almost 10 percent rally in Malaysian futures - currently trading below the day's peak of 2,860 ringgit ($870) per tonne - has tightened the spread.
"There has been dryness in Indonesia and Malaysia which is fuelling the rally in palm oil prices," said Sandeep Bajoria, chief executive of Mumbai-based brokerage Sunvin Group.
"India will be importing less palm oil this year."
India's palm oil imports are likely to drop to 7.8 million tonnes in 2013/14, from 8.3 million tonnes a year ago, traders told Reuters at the conference.
The country's overall edible oil purchases this year are forecast to climb almost 9 percent to 11.3 million tonnes from 10.4 million tonnes a year ago, traders said.
"If you look at the demand, we are growing by about 3-4 percent every year, plus we are adding about 20 million people," said B.V. Mehta, executive director of Solvent Extractors' Association of India.
A hailstorm that hit several rapeseed-growing districts in India last week could reduce its rapeseed output, increasing the country's dependence on soybean oil imports.
It is too early to estimate the damage caused by adverse weather, but losses could be anywhere between 200,000-700,000 tonnes, traders said.
"It is difficult to judge right now. It will take us a while to assess damage to crops ... we will only know after a few days," said Govindbhai Patel, a veteran trader from India's western city of Rajkot.
Competitive prices of soft oils such as soyoil and sunflower oil could see India buying more of these commodities. India could bring in 3.5 million tonnes of soft oils, up from 2.1 million tonnes last year, traders said. ($1 = 3.2765 Malaysian ringgit) (Reporting by Naveen Thukral and Anuradha Raghu; Editing by Himani Sarkar)
Source:- in.reuters.com
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