“We have indicated to the government that with international values coming down recently, it may not be a bad idea to revisit duty reduction measures only after kharif oil seed planting is over to ensure no negative signals go to our oilseed farmers,” said BV Mehta, executive director of the Soybean Extractors Association of India (SEA).
Edible oils currently attract an import duty of 15%.
Rising prices of edible oils were a major concern for the government since they were pushing up food inflation. But in the past ten days, international prices of crude palm oil have fallen to $1,150 per tonne from $1,250 per tonne. Similarly, soybean oil prices have fallen to $1,380 per tonne from $1,480 per tonne and sunflower oil prices have come down by $100 per tonne to $1,550 per tonne.
“Prices have started falling in the last ten days. The forward contracts for the coming weeks are down by $40 per tonne each week,” Sandeep Bajoria, CEO of oil consultancy firm Sunvin Group, told ET. “Since prices had gone up for the last several months, the demand for oils had started falling internationally. So, now the prices have started falling.”
Talking about the impact on the domestic market, he said, “The price fall of edible oils in the international market will also have a downward impact on the landed price of imported edible oils in India. As of now, edible oil prices have come down by Rs 10 per litre.”
Edible oils had turned costlier due to Chinese buying, stimulus money, la Nina weather problems in palm and soya producing areas, labour problems in Malaysia due to Covid-19, aggressive bio-diesel thrust in Indonesia and renewable fuel from soybean oil in the US and Brazil.
“In the last few days, we are seeing signs of fatigue in the market and bulls seem to be retreating. Whether this is going to be a short-lived phenomenon or more permanent only time will tell,” said Mehta of SEA.
Mehta said speculative activity in edible oils should be curbed. “In essential commodities like edible oils and oilseeds we can insist on compulsory delivery contracts. This will result in only serious players remaining active,” he said.
India annually imports 14.5-15 million tonnes of edible oils.