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, according to Reuters, citing 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 and inflation rates, which reached their highest level since January 2020 in July.

Monsoon rains usually bring up to 70% of the necessary precipitation for watering farms and replenishing reservoirs and aquifers to the country.

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

According to the Solvent Extractors’ Association of India (SEA), in July, the country increased its import of vegetable oils by 35% compared to June, reaching 1.77 million tons (46% higher than in July 2022), including palm oil, which increased by 58% to 1.08 million tons.

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

November palm oil futures on Bursa Malaysia rose 1.65% to a 3-week high of 3,935 ringgit/tonne or $847/tonne yesterday, amid increased exports and slow production growth.