India, the world's largest edible oil importer, has stopped fresh bookings for Soya oil and slowed palm oil purchases following a build-up of stocks at ports and rising domestic supply, traders said on Tuesday.
Stocks of edible oil at Indian ports, mainly Soya oil imported from Argentina and Brazil and palm oils from Malaysia and Indonesia, have surged to about 550,000 tonnes, more than double the normal 250,000 tonnes, they said.
"Importers miscalculated domestic demand and booked heavily in the past months," said a trader with an international trading firm, adding the summer oilseed crop turned out to be much better than had been expected.
Summer output in India, which imports nearly half of its annual oil needs, is estimated to surge by 38 percent from a year to 8.29 million tonnes in 2003/04 (November-October), after the country received the best monsoon rains in a decade.
Oilseeds output for the whole year to October has been estimated at 24.98 million tonnes, up from 15.1 million tonnes from a year ago.
"The oil is not moving to interior parts of the country from ports as there is little demand for the imported oil because of increased availability of domestic oils," said Sandeep Bajoria, chairman of the Central Organisation for Oil Industry and Trade.
Traders said local oil supply was seen rising to 700,000 tonnes in April and 725,000 tonnes in May from 500,000 tonnes and 530,000 tonnes in the respective months of the previous year.
Harvesting of the summer mustard crop, which has started in many parts of the country, has led to a sharp decline in domestic oil prices, making imported oils less attractive, traders said.
Domestic oil prices have fallen by seven to eight percent in the past three weeks.
"I don't see any fresh deal for Soya oil imports in another couple of months," said a Bombay-based oil trader, adding people were also cautiously finalising contracts for palm oils.
"This situation will change only with the pressure of summer oilseed crop subsiding in the coming months," he said.
Traders said edible oil imports in the coming months of the oil year to October are expected to fall sharply, with excessive purchases in the previous months and rising local supply.
Contrary to estimates of a fall, oil imports rose 1.3 percent to 1.59 million tonnes between November 2003 and March this year.
"Imports have not gone down so far, but bearish trends that are now prevailing in the market can lower imports by 20 to 30 percent in the April-June quarter from the previous year," said B. V. Meath, executive director of the Solvent Extractors' Association of India.
India imported 1.77 million tonnes of edible oils, including 393,000 tonnes of Soya oil, during the April-June period of 2003.
But imports in the year to October are likely to drop to 4.3-4.5 million tonnes from 5.1 million tonnes a year ago.