Very dry weather in India supports demand for vegetable oils

August in India will be the driest in the last 100 years, and the amount of precipitation in the country will be very small, partly also due to the influence of the El Nino phenomenon, - reports Reuters with reference to sources in the country's weather department.

The amount of precipitation in August will be the lowest in the entire history of observations (since 1901), which will reduce the yield of rice, soybeans and other summer crops, and will lead to a rise in prices at the rate of inflation, which in July reached the highest level since January 2020.

Monsoon rains usually bring to the country up to 70% of the precipitation needed to supply water to farms and replenish reservoirs and aquifers.

Rumors about India's possible purchase of 9 million tons of wheat from the Russian Federation to replenish stocks and high rates of vegetable oil imports indicate concern about food shortages due to dry weather.

According to the Producers Association of India (SEA), in July the country increased its import of vegetable oils by 35% compared to June to 1.77 million tons (46% higher than in July 2022), in particular, palm oil – by 58% to 1.08 million tons

In the period August 1-20, Malaysia increased palm oil exports compared to the same period in July by 9.8-17.4%, according to surveyors Intertek Testing Services and Amspec Agri, indicating stronger demand from India.

November palm oil futures on Bursa Malaysia rose 1.65% to a 3-week high of 3,935 ringgit/t, or $847/t yesterday, amid a pick-up in exports and a slow ramp-up in production.