China is the second largest buyer of palm oil after India, but supplies to the neighbouring country have come to a halt following the coronavirus outbreak. “India is the only bulk buyer left in the palm oil market after Chinese demand has been hit by the pandemic. It has brought down domestic oil prices by 5-7 per cent in the past two-weeks,” said Nirav Desai, managing partner, GGN Research.
Domestic edible oil prices increased up to 40 per cent in October-December 2019 primarily owing to the spike in international palm oil prices. Despite the price slide, domestic crude palm oil prices were 42 per cent higher year-on-year in January at Rs 76,500 per tonne.
In the past two weeks, crude palm oil prices in India have fallen 6 per cent and are expected to slip further. “Prices were expected to correct. They had unduly jumped 30-40 per cent in the third quarter this fiscal. The domestic prices are reflecting the international market and could come down further,” said BV Mehta, executive director, Solvent Extractors’ Association (SEA).
International crude palm oil prices slipped 20 per cent in January, primarily due to the restrictions posed by India and scare of coronavirus. In the past one week, crude palm oil prices in Malaysia and Indonesia have fallen 10 per cent as supply to China has stalled.
Palm oil imports into India from Malaysia were affected earlier in January after the government announced a new duty structure to restrict refined palm oil. “The step is seen as India’s objection to comments made by the Malaysian Prime Minister Mahathir Mohamad on the steps taken by the Indian government in Kashmir,” said an edible oil importer, who did not wish to be identified. He said the new duty structure had acted as an unofficial restriction on imports from Malaysia.
Rapeseed or mustard oil prices fell 9 per cent in January but were still 7 per cent higher year-on-year. “Mustard seed prices have mellowed as the new crop is expected to be around 8 million tonnes, compared to 7.5 million tonnes in the last season,” said a Jaipur-based edible oil manufacturer.
The price of domestic refined soyabean oil came down to Rs 88,000 per tonne after falling 9 per cent in January. However, the price was 16 per cent higher year-on-year.
Groundnut oil prices fell 4.35 per cent in January to Rs 110,000 per metric tonne, but have steadied in the past one week. The price in January was 12.4 per cent higher than that a year ago.