The share of soyabean and sunflower oils, or soft oils, in the country’s vegetable oils import could increase to over two million tonnes (mt) next season starting November with shipments of palm group of oils remaining unchanged, according to a section of the edible oil industry.

But not all in the industry subscribe to this view.

“India’s edible oils import will touch 11 mt next year with palm oil shipments remaining unchanged at 8.3 mt. Soyabean and sunflower oils import could increase to 1.2 mt each,” said Dorab Mistry, Director of Godrej International, at an industry meet in Mumbai during the weekend.

This is against the 10.6 mt oils projected to be brought into the country this season. According to the Solvent Extractors Association of India, vegetable oils import in November-August this season was up 7.72 per cent at 8.79 mt. So far, the share of palm group of oils in the import basket is 80 per cent against 75 per cent last season with soft oils, which also include rapeseed and others, making up the rest. Import of sunflower oil has dropped to 0.8 mt from 0.96 mt in the same period a year ago.

According to Mistry, sunflower oil prices will rule easy as its production is projected at record next year, when it could be 5.37 million tonnes.

“Sunflower and soyabean oils imports will rise because refiners will increasingly opt for them as they yield better margins. With sunflower oil, you gain all the 12 months in a year; with soyabean, you gain 10 months; and with palm oil, you gain only six months,” said Mistry.

Palm oil refiners face the problem of the oil being taxed both at the exporting source and the importing point in India. Indonesia and Malaysia, top palm oil producers, impose tax on export of crude palm oil. The tax is a measure to encourage refining in the respective countries. Malaysia imposes 4.5 per cent export tax at a reference price of $709, while Indonesia’s rate is nine per cent. On landing in India, crude palm oil is subject to 2.5 per cent Customs duty, whereas the duty on refined palm oil is 7.5 per cent.

The landed cost of crude palm oil here is $805 a tonne, while that of RBD (refined, bleached and deodorised) palmolein is $810. In contrast, de-gummed or crude soyabean oil costs $972 and sunflower oil $980.

“India is the top importer of sunflower oil from Ukraine, making up 30 per cent of the total exports in 2012,” said Svetlana Sinkovskaya, Marketing Director of APK-Inform Media group. She told the industry meet that India’s sunflower oil imports, despite dropping 17 per cent this season, could rise next season. According to a Hyderabad-based trader, such statements could be wishful thinking and there are several factors, including logistics, which determine vegetable oil imports.

“First, no one in Tamil Nadu uses soyabean oil. In Andhra Pradesh and Karnataka, consumption is limited. Only in the western States, it is consumed,” he said. “Logistics will also have to be factored in. We get soyabean oil mainly from Argentina and it takes 45-60 days for shipments to arrive. Only big players can take such a risk. Can a small refiner, say, in Tamil Nadu, take such a risk?” the trader asked.

Referring to Ukraine situation, he said that it was more likely that sunflower oil could be consumed more in the region with drop in imports of other oils there. “In the last two days, sunflower oil has gained $50 a tonne. Will people risk such spikes?” he asked. In the global market, sunflower oil is ruling at a premium to soyabean oil. In Mumbai, it is higher by Rs 5 a kg than soyabean oil and Rs 13 a kg costlier than palmolein.

“If prices of vegetable oils rise, then the situation will be different. Then, it could be beneficial to import palm oil,” Mistry said.

> subramani.mancombu@thehindu.co.in

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