Soyoil may outpace palm on India import tax cut-Mistry

KUALA LUMPUR, March 20 (Reuters) - India, a top vegetable oil importer, may see prices of imported soyoil keep their premium over rival palm oil due to increased demand after a cut in soyoil import duties, a leading analyst said on Thursday.

Dorab Mistry, head of vegetable oil purchasing with Indian conglomerate Godrej International, said the world's second-largest consumer of vegetable oil after China may import up to 1.5 million tonnes of soyoil from Nov 2008 till Oct 2009.

Soyoil imports were originally estimated by traders to be about 1.4 million tonnes for the period.

Palm oil imports from Malaysia and Indonesia, are expected to fall to 5.3 million tonnes from the 5.66 million tonnes forecast last week, Mistry said. Sunflower imports would jump to half a million tonnes, just 16.6 percent short of trader estimates.

Mistry said he expects crude palm oil futures to fall to 1,500 ringgit and RBD palm olein to slip towards $500 on a free on board basis.

"On the other hand, I now expect soyoil to maintain a premium over palm. Soyoil is likely to fall to $550 free on board Argentina," Mistry said in an emailed statement.

India cut import duty on soyoil to keep domestic prices stable,Trade Secretary G.K. Pillai said on Thursday, but he did not give further details on the extent of the cut or the timing. [ID:nDEL430471]

Traders said import tax on crude soyoil, currently at 20 percent, may be totally withdrawn as with crude palm oil and sunoil.

The Indian government is keen to ensure steady supplies and moderate prices ahead of general elections scheduled to be held in April and May, which analysts say was a key factor in cutting the import tax.

Indian traders said landed cost for palm oil was $595 per tonne, a discount of 17.9 percent to soyoil at $725 per tonne on account of palm oil's duty free status for the past one year.

Mistry revised his estimate for India's vegetable oil imports for the oil marketing year which started in Nov last year up 4.2 percent to 7.5 million tonnes from his previous estimate last week at the Bursa Malaysia Palm Oil Conference.

Elsewhere in Europe, the scenario is different with palm oil trading at 6.9 percent premium to soyoil priced at $547 per tonne.

"Additional Indian demand of 300,000 tonnes will not make any difference to my price projection because worldwide supply comfortably exceeds demand this year," he said.

"Recent estimates of a big increase in plantings of soy in United States and of canola in Canada will cancel out any rise in Indian demand."

India imports more than half of the 11 million tonnes of vegetable oils it consumes annually.

Palm oil makes up 80 percent of the country's vegetable oil imports and soyoil the remainder. India buys refined palm oil from Malaysia and crude palm oil from Indonesia as well as soyoil from Brazil and Argentina.