India Palm Oil Imports to Ebb on China, Argentina Row

April 25 (Bloomberg) -- Palm oil imports by India, the largest buyer, may drop this year as buyers switch to soybean oil to profit from China’s ban on shipments of the commodity from Argentina, the biggest global supplier.

Purchases may fall to 6.7 million metric tons in the year to Sept. 30, from 6.9 million tons a year ago, Thomas Mielke, executive director of Oil World, said in an interview in Dubai yesterday. Soybean oil shipments may rise to as much as 1.5 million tons from 1.06 million tons a year ago, he said.

Lower purchases of palm oil by India, which overtook China as the top buyer of the commodity in 2009, may pressure prices that touched an 11-week low on April 19 in Malaysia. Sales from Malaysia to the South Asian country slumped 81 percent in the first 20 days of April compared with the same period in March, surveyor Societe Generale de Surveillance said last week.

“The price of soybean oil is attractive because of the lack of Chinese buying,” he said. “That’s impacting palm oil as India is buying less.”

The price-premium that soybean oil commands over palm oil declined 15 percent to $81 a ton on April 23, according to data compiled by Bloomberg. The premium has narrowed from a 12-month average of $131 a ton, making soybean oil more affordable.

“India has stepped into the space created by very competitive Argentinean soya oil,” Dorab Mistry, a director at Godrej International Ltd., said in a copy of his speech prepared for delivery the conference in Dubai. Godrej is one of India’s biggest buyer of vegetable oils.

‘Step Up’

Soybean-oil purchases by India may reach 400,000 to 450,000 tons in the quarter ending June, up from 330,000 tons a year ago, Mielke said, as the country “steps up” imports.

Palm oil for July delivery rose 2 percent to 2,540 ringgit ($797) a metric ton on the Malaysia Derivative Exchange on April 23. The vegetable oil soared 57 percent last year on demand from India and China, the biggest buyers. July-delivery soybean oil gained 0.8 percent to 39.33 cents a pound in Chicago.

China, the largest user of soybean oil, suspended purchases of the commodity from Argentina this month on quality standards. Argentina supplies about three-quarters of China’s demand.

The Asian nation can’t turn to Brazil or the U.S. to make up for a lack of Argentine supplies, Argentina’s farm secretary Lorenzo Basso said April 20 in a telephone interview from Buenos Aires. Prices in the U.S. are too high and Brazil does not have enough capacity to cover China’s demand, he said.

The U.S. is the largest exporter of soybeans. Brazil and Argentina are the second- and third-biggest growers.

India’s total vegetable-oils purchases may reach a record 9 million tons in the year to Oct. 31, Mistry said in an interview on April 7. Imports were 8.66 million tons year last year, with palm oil accounting for more than 80 percent of the total.