India's overseas purchases of palm oil in the year starting November are set to rise nearly eight percent to a record 10 million tonnes as producers dump the tropical oil at steep discounts, key importer Ruchi Soya said on Thursday.

Higher purchases by India, the world's top importer of cooking oils, could support benchmark Malaysian palm oil futures which are trading near their lowest level in 6-1/2 years due to soft prices and concerns over China.

"India has become the dumping ground for Indonesian and Malaysian palm oil," said Nitesh Shahra, president of the refinery division of Ruchi Soya, the country's biggest edible oil refiner.

"Due to lower prices and depreciating ringgit, in dollar terms palm oil prices have fallen sharply and it has become very attractive for buyers," Shahra told Reuters on Thursday. A weak Malaysian ringgit makes palm cheaper for offshore buyers. In dollar terms, Malaysian palm prices have fallen around 30 percent since a year ago.

In the current marketing year ending October, India's palm oil imports are likely to jump 16 percent to 9.3 million tonnes, or accounting for nearly half the output of the world's second biggest producer Malaysia.

"The spread between soyoil and palm oil has been consistently widening in the last few weeks," said Shahra, adding the discount had widened to $150 per tonne for spot delivery and September and October shipments were above $200. "At this level other oils can not compete with palm oil."

India also buys soyoil from Latin America and a tiny amount of sunflower oil from the Black Sea region. India's soyoil imports in the current year to October are likely to rise 45 percent to a record 2.9 million tonnes due to attractive prices in the first half, said Shahra.

Total edible oil imports in the next marketing year are expected to rise 7.1 percent to 15 million tonnes, after a likely rise of nearly 21 percent in the current year, he said.

Sunflower oil imports would remain steady next year at around 1.5 million tonnes as the premium over other oils has risen in last few months, he added.

Malaysian palm oil futures have been declining since June and hit a 6-1/2 year low of 1,863 ringgit a tonne this week. Shahra expects prices could drop another 6 percent from the current level of 1,916 ringgit to 1,800 ringgit if inventories rise further due to poor demand from biodiesel industry.

"Due to a drop in crude oil prices, there are few takers for palm oil from biodiesel industry. China has been going through economic turbulence," he said.

Source:reuters.com