India's edible oil consumption to shrink for second year as prices rally

  • Reuters
  • Commodities News
India's edible oil consumption to shrink for second year as prices rally
Credit: © Reuters.

By Rajendra Jadhav

MUMBAI, Feb 9 (Reuters) - India's edible oil consumption is expected to contract for the second straight year in 2020/21 as a rally in vegetable oil prices to multi-year highs curbs retail buying, industry officials told Reuters.

Lower demand in India, the world's biggest importer of vegetable oils, could limit a rally in benchmark Malaysian palm oil prices FCPOc3 which are trading near their highest level in a decade.

Lower demand could also weigh on U.S. soyoil BOc1 and sunflower oil.

"A large section of the Indian population is price cautious. As their income is not rising because of COVID-19, per capita consumption would go down," said Angshu Mallick, deputy chief executive of Adani (NS: APSE ) Wilmar, a leading edible oil refiner.

Edible oil consumption could fall to 21 million tonnes in 2019/20 marketing year ending on Oct. 31 from 22 million a year earlier, he said. In 2018/19 demand was around 23 million tonnes.

India's edible oil consumption usually rises by 2-3% per annum because of rising population and prosperity, but this year it will likely fall by around 5%, he said.

Lower consumption would reduce imports as India fulfils more than 70% of its demand through imports.

"Imports fell last year due to lockdown. This year a combination of very high prices and increased availability of oilseeds would bring down imports," said Atul Chaturvedi, president of the Solvent Extractors Association of India.

India's edible oil imports could fall to 12.5 million tonnes in 2020/21 from last year's 13.2 million, the lowest in six years, Chaturvedi said.

The country imports palm oil mainly from Indonesia and Malaysia, and other oils such as soy and sunflower oil from Argentina, Brazil, Ukraine and Russia.

India's palm oil imports would remain largely steady near last year's 7.2 million tonnes, the lowest in nine years, Chaturvedi said.

But soyoil imports could drop marginally from last year's 3.4 million tonnes, while sunflower oil imports could drop to 1.75 million tonnes from last year's 2.51 million, he said.

India's rapeseed output could rise to 8 million tonnes this year from last year's 7 million as farmers have expanded planting, said Govindbhai Patel, managing director of trading firm G.G. Patel & Nikhil Research Company.

"Local edible oil supplies are expected to go up this year with higher production of rapeseed and groundnut," Patel said.

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