Edible oil prices are likely to remain elevated till the arrival of new crop in the October-November period, industry officials said.
Oils like mustard, groundnut or palm, consumed domestically, and commercially used soybean and sunflower oils have seen a sharp rise in prices in the last six months despite government efforts to cool off rates by reducing high tax levies.
The rates are unlikely to come down anytime soon as India meets more than half of domestic demand through imports, BV Mehta, executive director, Solvent Extractors Association of India (SEA) said.
In the international market, prices of edible oils have jumped sharply due to various factors. The soybean oil price has surged due to efforts of making renewable bio-diesel fuel from it in the US, Brazil and other countries, he said. Since soybean oil prices are high, palm oil prices have also gone up. When soybean oil is sold at $1300 per tonne, palm oil will be lower by $100-150 per tonne. So, soybean and sunflower oil prices are pulling up the prices of palm oil prices as well, he said.
“Moreover, the conditions which were expected to improve in the second half of the year, have not been changed much . Sunflower in the UK will be harvested in August and crushing will begin September onwards and, therefore, prices should come down in the next four months or so,” Mehta said.
“The corona outbreak has affected labour in Malaysia and there has been a larger consumption of soybean oil in making of biodiesel. Of the 250 million tonne of soybean meal oil available globally, around 50 million tonne have been diverted towards biodiesel leading to reduced availability of edible oil in the market putting pressure on the overall sentiment,” he said.
Average prices of edible oils in retail markets have increased by up to 52 % in July compared to the year-ago period, according to official data. In a written reply to Rajya Sabha, Minister of State for Food and Consumer Affairs Ashwini Kumar Choubey said the government has taken several measures with respect to essential food items like pulses and edible oil to curb the increase in prices in the wake of the COVID pandemic. As per the data shared by the minister, the average monthly retail prices of groundnut oil increased by 19.24 % in July over the same month last year. Prices of mustard oil have increased by 39.03 %, vanaspati by 46.01%, soya oil by 48.07%, sunflower oil by 51.62% and palm oil by 44.42% during the period under review.
“To soften the prices of edible oils, the duty on Crude Palm Oil (CPO) has been cut by 5% from 30 June 2021 until 30 September 2021. This reduction has brought down the effective tax rate on CPO to 30.25 % from the earlier 35.75 %. Further, the duty on Refined palm oil/Palmolein has been reduced to 37.5% from 45%,” Choubey said. A revised import policy for Refined Bleached Deodorized (RBD) palm oil and RBD palmolein has been put in place from June 30, 2021 under which these items have been shifted from the restricted to the free category, he added.