KUALA LUMPUR: India is expected to import more palm oil this year to counter a domestic deficit in vegetable oil stockpiles, helping offset a drop in demand for the tropical oil for blending purposes from the biofuel sector, leading industry analyst James Fry said.
Higher purchases by the world's top palm oil buyer should underpin benchmark prices which sank almost 15 percent in 2014, partly dragged by a crude oil rout that made palm an unattractive option for blending into biodiesel.
Fry said India and China, the world's top vegetable oil consumers, were "massively deficit" in vegetable oils and do not have enough oilseed output to meet their growing demand.
"The reality is, in the foreseeable future, they will be mega-importers (of palm)," analyst Fry, chairman of commodities consultancy LMC International, told Reuters on the sidelines of a palm oil conference in Kuala Lumpur.
"India is the one that is most interesting," Fry said. "India can swing - and India does swing as prices change."
Fry did not give any estimates. He is scheduled to present on the topic "Commodity Cycles and the Palm Complex" at the conference on Wednesday.
Industry officials see India's edible oil imports at a record top of 12.5-13.0 million tonnes in the year to October, versus 11.6 million tonnes a year ago, as a drop in domestic oilseed output prompts buyers to boost purchases.
Nearly 60 percent of India's annual edible oil demand of 18-19 million tonnes is met by overseas purchases, consisting mainly of palm oil sourced from Indonesia and Malaysia.
But the tropical oil will have to compete with ample global supplies of rival soyoil to retain market share, said Fry, as buyers are prone to opt for the cheaper option.
India's palm oil imports in January dropped more than a fifth from a month earlier as refiners switched to sunflower and soyoil, data from a trade body showed.
Crude palm oil is being quoted at $685 a tonne, cost and freight, in India for March shipment while soybean oil is priced at $815 a tonne. But the spread is set to narrow with soybean oil for April, May and June delivery being quoted at $760.- Reuters
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