By Thomas Kutty Abraham Jan. 14 (Bloomberg) -- India surpassed China as the world’s biggest buyer of palm oil as rising incomes increased demand for fried and processed foods and drought reduced domestic cooking oil production, according to a processor group. The country imported 7 million metric tons in 2009, more than China, data from the Mumbai-based Solvent Extractors’ Association of India shows. China’s imports jumped 23 percent to a record 6.4 million tons last year, the National Grain & Oils Information Center said yesterday. Vegetable oil purchases by India will reach a record 9.4 million tons this year as an import-tax waiver reduces costs and the domestic crop declines, B.V. Mehta, executive director of the association, said in an interview yesterday. Increased imports may extend palm oil’s 57 percent rally last year and pare near-record inventories in Malaysia. “India is adding 20 million people, or equivalent to an Australia, to its population every year,” Mehta said. “That’s driving demand, along with rising per-capita incomes.” India relies on overseas supplies to meet more than half its edible oil demand and last week sought bids to import 30,000 tons of palm oil. The commodity accounts for 80 percent of the country’s total cooking fat purchases. “India has been setting a record for vegetable oil imports year after year,” he said. “There are no signs of that trend being broken.” Edible oil purchases may average 2 million tons in the first two quarters of the crop year that started Nov. 1, Mehta said Jan. 8. Imports in November were 712,677 tons, 37 percent more than a year earlier, according to the association. Data for December is scheduled to be released today. China Imports “China’s palm oil imports will continue to rise,” said Tommy Xiao, analyst at Shanghai JC Intelligence Co., by phone from Shanghai. Still, “the pace may be steady” after the government boosted stockpiles of vegetable oil and oilseeds to encourage domestic production and moderate price swings, he said. Import growth should exceed the 3 percent to 5 percent a year, a figure often used by official forecasters, he said. China, the world’s largest vegetable oil buyer, may have imported 9.3 million tons of all oils last year, the China National Grain and Oils Information Center, said Jan. 8. The spike last year in Indian imports stemmed partly from a drought and subsequent policies to boost domestic supplies, so it’s unclear whether that pace will be sustained this year, Xiao said. Drought A drought across half of India last year damaged rice, sugar cane and oilseed crops, pushing food inflation to near an 11-year high. Monsoon-sown oilseeds production in the 2009-10 season may drop 9 percent to 13.7 million tons, according to the Central Organization for Oil Industry and Trade, the country’s biggest group of processors. Palm oil for March delivery gained for the first time in six days, adding as much as 1.4 percent to 2,544 ringgit ($750) a ton on the Malaysia Derivatives Exchange. Inventories in Malaysia, the second-biggest producer, climbed 16 percent in December to 2.24 million tons. The record was 2.27 million tons in November 2008.

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