Kuala Lumpur, Aug 25 - India is looking to buy up to 900,000 tonnes of vegetable oil in September and October to meet surging festival demand before the winter soybean crop gets harvested, a top trade official said on Monday.
Soyoil will account for 200,000 tonnes, while the rest will be made up of palm oil as buyers exploit palm oil's discount of $200 per tonne, said Davish Jain, chairman of the Central Organisation for Oil Industry and Trade.
"Lately, the drop in prices has created a serious aberration in the market but upcoming festivals should see physical demand at its peak," Davish Jain told Reuters at the sidelines of an industry conference in the Malaysian capital.
"Demand still has to be met even though there could be a higher soybean harvest coming in at mid-October."
But buyers from China and India, the world's biggest vegetable oil importers, have cancelled or renegotiated around 800,000 tonnes of palm oil deals in the past few weeks as prices slumped, dealers said.
And Indian palm oil buyers asked Asian palm producers producers to defer up to 100,000 tonnes of crude palm oil meant for August delivery to September and October.
India imports almost half of its annual consumption of about 11 million tonnes of vegetable oils in the form of palm oil from Malaysia and Indonesia and soyoil from Brazil and Argentina.
LOCAL OILSEEDS OUTPUT
The South Asian nation's soybean crop, due for harvesting in mid-October, will likely exceed 10 million tonnes, if the monsoon rains revive strongly.
Output of soybean, which is grown only once in a year, was 9.3 million tonnes in 2007.
"There has been an early withdrawal in the monsoon rains in certain areas, which is worrying, but we are heading into the peak monsoon period, so soybean output may rise significantly," Jain said.
"Also, soybean acreage has increased by 8 percent, so this will see a better rise in output."
The June-September monsoon is vital for the soybean crop in India, which depends heavily on rainfall for its farm output as irrigation facilities are inadequate.
Better soybean production may compel India to re-impose taxes on vegetable oil imports that were dropped in April, Jain said.
"With the overall weakness in global vegetable oil prices and high stocks, India may contemplate imposing some duties at the time of the soybean harvest in mid-October in a bid to support local prices," Jain said.
Surging prices and worries about food-led inflation led India to drop its 20 percent tax on crude palm oil in April, and cut the levy on refined oils to 7.5 percent from 20.75 percent.
Malaysian crude palm oil futures fell as much as 4 percent on Monday as weaker crude oil spurred heavy stop-loss selling, traders said.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange was down 87 ringgit at 2,628 ringgit ($781) per tonne after hitting a session low of 2,610.