The Solvent Extractors’ Association of India (SEA) estimates oil imports during the current oil year (November 2022-October 2023) would be marginally lower than the 14 million tonnes (mt) imported in the oil year 2021-22 .
SEA Executive Director, B.V. Mehta, said India may import around 13-13.5 mt of edible oil in the current oil year due to record stocks of 2.6 mt as on November 1. He was speaking at the 18th Indonesian Palm Oil Conference and Price Outlook 2023, organised by the Indonesian Palm Oil Association (GAPKI) at Bali, Indonesia, on Friday.
The quantum and type of oil imports will depend on price parity and the spread between palm oil and soft oils, he said.
The opening stock of 2 mt as on October 1, 2021, increased to nearly 2.5 mt as on October 1, 2022. India needs around 1.9 mt of edible oils a month, and it currently operates at 40 days’ stock, which is the highest inventory held by the country. He estimated import of 14 mt for the oil year 2021-22.
India’s imports of edible oil hit a record 14.9 mt in 2018-19. However, import volumes reduced to about 13 mt in 2019-20 and 2020-21, due mainly to higher domestic production and lower demand due to Covid. High prices also led to demand destruction, he said.
Mehta said edible oil consumption, at 22.5 mt in 2018-19, fell by 1-1.5 mt in 2019-20 and 2020-21 on account of Covid and high prices.
However, with conditions returning to normal, growth is back on track. “I expect consumption growth between 2-3 per cent in the next five years. With this assumed growth, the demand for edible oils is estimated at 25.5-27 mt by 2025-26,” he said.
Oilseeds production is projected to increase to a maximum of 38-40 mt by 2025-26, from 30 mt currently. The availability of vegetable oil from primary and secondary sources is projected to increase by 3 mt to 13.5 to 14 mt by 2025-26.
Against this, India’s consumption or demand for vegetable oils would be around 26-27 mt by then. The gap of 50 per cent, which is about 11-12 mt, is expected to be bridged through imports.
Reiterating that the quantum and type of oils imports will depend on price parity and the spread between palm oil and soft oils, Mehta said the current price difference of nearly $400 a tonne between palm product and soft oil makes palm oil more attractive to buy. However, soft oil would be preferred for imports if the difference reduces to, say, less than $250 a tonne, he said.