India is likely to import a record 16.5 million tonnes (mt) of vegetable oil during 2022-23, according to the United States Department of Agriculture (USDA).

In its September report on ‘Oilseeds: World Markets and Trade’, USDA said India’s imports includes nearly 10 mt of palm oil.

Additionally, imports of sunflower oil have reached unprecedented levels as large volumes of this premium oil are being offered at a discount from the Black Sea region, it said.

Replenishing stocks

While consumption of vegetable oils has recovered this marketing year, recent large volumes of imported oils will also help replenish stocks in India and support growing demand during festivals in coming months, it said.

Terming 16.5 mt of imports as a reasonable estimate, BV Mehta, Executive Director of Solvent Extractors’ Association of India (SEA), told businessline that he won’t be surprised if shipments exceed that range.

Stating that the line-up for September and October may be around 2.5-plus mt, he said India has already imported around 14 mt up to August. The country had imported 13.1 mt in 2016-17, which was the record for an all-time high. He opined that 2022-23 will break all previous records.

Drop in prices

Agreeing with USDA estimates, Sudhakar Desai, President of Indian Vegetable Oil Producers’ Association (IVPA), said there has been a rebound in vegetable oil consumption due to the steep decline in the prices compared to the previous year.

He said around 4,00,000-5,00,000 tonnes of imports in August have led to excess stock build-up in India. There has been around 6-7 per cent of consumption growth in the country after a stagnant demand in the previous two years due to high prices, he said.

Since the share of refined olein has increased to about 30 per cent of the palm import basket, IVPA recommends widening the duty gap between crude palm oil and refined oils to avoid excessive imports. The increase in the import of refined palm oil has been severely damaging the domestic refining industry, Desai said. 

No El Nino impact

The USDA report said India’s imports in the new marketing year 2023-24 are projected to decline to 14.6 mt, as unusually large oil inventories are expected at the end of the current season.

The report also hoped that larger carrying stocks would help alleviate any uncertainties about El Niño effects on domestic and Southeast Asia oil output.

“Ending stocks at the end of 2023-24 are projected to decline year over year due to higher consumption, but still remain elevated,” it said.

Agreeing with this, Mehta said Indian imports will reduce in 2023-24 because the country will be carrying a huge stock. Normally the country carries around 2 mt of stock for the next year. However, it may go up to 3.5 mt during this year, he said.