MUMBAI: India's edible oil imports in the year from November 2012 may rise by as much as 10 percent if poor monsoon rainfall cuts planting and hurts yields of oilseeds such as soybean and groundnut, the country's leading edible oil importer said.
India, the world's biggest edible oil importer, buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.
"Normally poor rainfall does affect the yield of oilseeds," Dinesh Shahra, managing director, Ruchi Soya,, told Reuters in an interview on Monday.
"If oilseeds production goes down, next year imports are likely to go up by around 5 to 10 percent," he added.
Key oilseeds growing states in India like Maharashtra, Madhya Pradesh, Rajasthan and Gujarat have so far received sharply lower rainfall than average since the beginning of the monsoon season on June. 1.
Indian farmers have cultivated summer-sown oilseeds on 10.88 million hectares as of July 20, down from 12.14 million hectares during the same time a year ago, farm ministry data showed.
The south Asian country's total edible oil imports in the current year ending Oct. 31 could rise 13 percent to 9.5 million tonnes, from 8.4 million tonnes last year, Shahra said.
India imported 6.25 million tonnes edible oil between November to June compared with 4.94 million tonnes during the same period a year ago as importers stepped up purchases earlier this year expecting a higher duty on imports.
Output of soybean, which has lower oil content than groundnut and rapeseed, in 2012/13 might exceed the industry's previous year estimates of 10.65 million tonnes as farmers expand acreage to cash in on a record high price.
The area planted with soybean is likely to rise 10 percent this year although yields will depend on progress of the monsoon rains, Shahra said.
"Assuming the monsoon progresses reasonably well going forward, with the increased acreage, we may see a crop of 10.5 to 11 million tonnes," Shahra said.
The output figure from the Central Organization for Oil Industry & Trade (COOIT) is below government estimates of 12.74 million tonnes but is used by the industry as a benchmark.
The key August soybean contract on India's National Commodity and Derivatives Exchange hit a record high of 5,064.5 rupees per 100 kg last week, tracking a rally in the United States. Soybean prices in India have nearly doubled in 2012.
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India last week lifted a six-year old freeze on the base import price of refined palmolein, a move that will make refined palm oil imports from Indonesia more costly and help protect domestic refiners. [ID: nL4E8IJ4DI]
The decision will help Indian refining industry as changes made by Indonesia last year in its exports tax structure favoured sales of refined oil over crude, Shahra said.
Indonesia, the world's top palm oil producer, tweaked its tax structure last year to promote refined products, hurting domestic industries in major buyers such as India.
The Indonesian policy nearly doubled India's refined palmolein imports to 1.2 million tonnes for the first eight months of the current year from November in comparison with the year-ago period. Crude palm oil is still the bulk of imports.
"Ideally the import of refined oil in India should go down," Shara said.
A lot of refining capacity has been coming up in Indonesia due to the change in export taxes and that could push crude palm oil prices higher, trimming the premium of refined over crude.
"Those (new) refiners also need crude palm oil as raw material. This may put some pressure on the global prices of crude palm oil."
Demand for Indian soymeal is very good, especially from Iran, as hot w eather has slashed the crop in Latin America and the United States, Shahra said.
"The USA has witnessed one of the worst droughts. South America also is going through adverse weather conditions. There will be opportunities for the exporters," he said.
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