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Kuala Lumpur. Palm oil futures rose to the highest level in more than two months on expectations that India, the biggest buyer of vegetable oils after China, would buy more as low rainfall in key growing areas threatens output.

India’s vegetable oil purchases in the year ending Oct. 31 may jump 27 percent to 8 million tons, the Solvent Extractors’ Association of India said on Thursday. Imports in the nine months to July 31 jumped 55 percent to 6.42 million tons, it said.

Increased imports by the South Asian country may sustain a 48 percent rally in global palm oil prices this year. The nation relies on overseas purchases to meet more than half its cooking oil needs, with palm oil accounting for 80 percent of the total.

October-delivery palm oil rose 2.2 percent to 2,515 ringgits ($716) a metric ton, the highest since June 5, on the Malaysia Derivatives Exchange.

“We could see an unprecedented rally in palm oil because of higher import proposition from India,” Harish Gallipelli, a vice president at JRG Wealth Management, said from Kochi.

The India Meteorological Department on Monday cut its monsoon forecast for a second time this season, saying showers in the June-September period will be 13 percent below normal, compared with a 7 percent deficit estimated in June.

A quarter of India’s 626 districts have declared drought, causing acreages of crops such as rice to shrink from year-earlier levels.

“Production of crops will suffer a major setback this year, as the dryness has partly prevented plantings and will also curb the yield potential massively,” the Solvent Extractors’ Association said.

“Erratic monsoons and likely lower oilseed crops will further push up the imports in September and October.”

Monsoon-sown oilseeds, including peanuts and soybeans, were planted on 15.1 million hectares in India as of Aug. 6, compared with 15.6 million hectares a year ago, the Farm Ministry said.

Bloomberg