India will be in the market to import up to 400,000 tonnes of palm oil and about 50,000 tonnes of soyoil in the next three months, as importers rush to take advantage of a deepening discount for palm versus soy oil, a leading industry official said on Monday. Palm oil's relative discount to soyoil has widened due to abundant supplies for the food sector in Indonesia and Malaysia while soyoil reserves have shrunk as more is diverted into the biodiesel sector in South America and the United States, said Sandeep Bajoria, chairman of the All India Seed Association.
"The commodity that has been exported more is palm oil since in the United States and South America, much of the soyoil is consumed domestically," Bajoria told Reuters in an interview ahead of a three-day conference organised by Bursa Malaysia.
"The larger the exports volume, the more discount there is. Palm oil imports (to India) will surge in the next three months because of the wide discount."
Crude palm oil futures on the Bursa Malaysia Derivatives Exchange jumped 5.8 percent to a new high of 3,914 ringgit per tonne on hopes of more Indian imports and record prices of soyoil, Malaysian traders said.
Crude palm oil sells in Rotterdam at $1,225 per tonne, roughly a 20 percent discount to soyoil, which trades at $1,460, Reuters data showed on Friday.
But traders and industry officials expect that discount to narrow to less than $100 a tonne as climbing prices drive more consumers and end-users to turn to the cheaper grade, which is more widely available but has the drawback of solidifying in cold weather.
India, the world's second largest buyer of vegetable oils, imports roughly half of the 11 million tonnes it consumes annually. It imports palm oil from Malaysia and Indonesia and soyoil from Brazil and Argentina.