Palm | Kelapa Sawit

MUMBAI, Sept 23 (Reuters) - India’s 2012/13 edible oil imports could rise 4.2 percent to a record high, with palm oil cornering the bulk of that, a Reuters poll showed, as the world's second most populous country fails to raise output quickly enough to meet demand from a growing middle class.

The world's biggest importer of edible oils could buy 10 million tonnes in the year to Oct. 31, 2013, against an estimated 9.6 million tonnes in the current year, the poll of 10 industry experts attending the Globoil India Conference showed.

Higher Indian imports could provide crucial support to palm oil prices, which are flagging compared with rivals like soyoil, weighed down by a build-up in inventory in the top two producing countries -- Indonesia and Malaysia.

"Population and prosperity are the two main drivers of (Indian) demand," said Govindbhai G. Patel, managing partner of GG Patel & Nikhil Research Co.

Indians use vegetable oils to cook most of their famous curries from pav-bhaji to samosa but recycling is common, keeping per capita consumption below global averages.

Increased wealth from an economy targeted to grow at 6.5 percent this year should prompt more purchases of fresh oil while prosperity also boosts consumption of biscuits and sweets made with edible oils.

India's 1.2 billion population is expanding at around 1.6 percent per year - or more than the population of the Netherlands.

The scale of demand is forcing India to fulfil more than half of its requirements through imports.

Despite higher prices, local demand is expected to rise by 3.1 percent in 2012/13 to 17.1 million tonnes. Domestic supplies are likely to increase by 2.5 percent, Patel said.

A sharp drop in the value of the rupee in the past six months has made imports of edible oils expensive and that could prompt price-sensitive India to buy a greater amount of palm oil, which is cheaper by nearly a quarter than soyoil.

"The entire incremental growth in imports will be fulfilled by palm oil," said Dinesh Shahra, managing director of Ruchi Soya RCSY.NS, the country’s top soybean processor.

India could therefore buy 7.8 million tonnes of palm oil in 2012/13, up 12.2 percent from the year earlier, the poll showed.

PALM OIL EATING SOYOIL’S SHARE

Soyoil imports into India, which traditionally buys more than 1 million tonnes a year from the world market, are likely to fall in 2012/13 as it is asking a hefty premium of nearly $300 per tonne over palm oil.

"Prices are not in favour of soyoil imports. It is costly," said Atul Chaturvedi, chief executive of Adani Wilmar, a leading India-based edible oil importer.

Local supplies of soyoil are also set to rise next year due to higher production, industry officials said.

Soyoil, along with sunflower and groundnut oil, are long-standing traditional local products preferred by the middle class, while palm oil is a cheaper option which the government subsidises for poorer Indians. Industrial buyers like biscuit and sweet makers also use palm oil.

India is likely to produce a bumper crop of rapeseed, which contains higher oil than soybean, due to ample rainfall in the top producing north-western Rajasthan state in August and September, said Davish Jain, chief of the Indore-based Prestige Group, a soybean processor.

India’s imports of sunflower oil are expected to jump nearly 50 percent in 2011/12 to 1.2 million tonnes and are likely to remain steady next year, Shahra said.

"Sunflower and soyoil prices are trading at almost the same level. When you offer Indian housewives soyoil and sunflower oil, they will choose sunflower oil," he said.

India imports palm oil mainly from Indonesia and Malaysia and soyoil from Brazil and Argentina.