India May Import More Soybean Oil If Duty Scrapped, Group Says

March 19 (Bloomberg) -- India, the world’s second-biggest buyer of vegetable oils, may import more soybean oil from South America if a 20 percent import duty is removed, the head of a processors’ group said, amid speculation the tariff may end.

Purchases from Argentina and Brazil may be increased and supplies of palm oil from Malaysia and Indonesia may be cut, Davish Jain, chairman of the Central Organisation for Oil Industry, said today. The finance ministry will shortly issue a notification scrapping the duty, the Economic Times reported today, citing an unidentified government official. Ministry spokesman B.S. Chauhan couldn’t immediately comment.

While India imposed the import duty on crude soybean oil in November to shield local farmers, no duty was levied on crude palm oil, boosting imports. Increased Indian purchases may help stem a 44 percent decline in soybean oil prices in Chicago and pressure Malaysian palm oil prices that rose 14 percent this year on surging sales to India and China.

“Duty abolition will pave the way for a further influx of cheaper edible oils,” Jain said in a phone interview from Indore. “Still, I fail to see any logic behind this proposal as edible oil prices are down and the economy is close to a deflationary situation.”

India relies on imports to meet almost half its edible-oil demand. Inflation eased from 12.91 percent in August to a six- year low of 2.43 percent in the week to Feb. 28.

The South Asian nation boosted vegetable oil imports 68 percent to 2.95 million tons in the four months ended February from a year earlier, the Solvent Extractors’ Association of India said this week. Palm oil imports made up 2.33 million tons, or 83 percent of the total, the group said.

Soybean oil imports totaled 281,349 tons between November and February, compared with 172,884 tons a year earlier, according to the processors’ group.

Palm oil for June delivery advanced as much as 2.1 percent to 1,945 ringgit ($532) a ton in Kuala Lumpur today. Soybean oil for May delivery climbed as much as 2.7 percent to 31.74 cents a pound in after-hours electronic trading.