Edible oil prices up on duty rollback

Edible oil prices reacted sharply to the import duty rollback on crude palm oil (CPO) and jumped across all sectors by at least by Rs 10 per 10 kg.

The government had decided to rollback the import duty on CPO to 45 per cent today, after bringing it down to 40 per cent from the peak of 50 per cent two days ago.

In the spot market today, palmolein traded in the range of Rs 480-482 per 10 kg, a rise of Rs 10 from the previous day, while soybean oil jumped Rs 10 to settle between Rs 506- 508 per 10 kg. The CPO price on the National Board of Trade (NBOT) jumped to Rs 505 per 10 kg from Rs 500 per 10 kg on the previous day. 

POLICY FLOP
Oils	Duties before revision	Duties revised  on July 23	Current duties after rollback
Soybean Crude/Refined	45.00	40.00	40.00
Crude Palm Oil	50.00	40.00	45.00
RBD Palmolein	57.50	52.50	52.50
Crude Sunflower Oil	50.00	40.00	40.00
Refined Sunflower Oil	60.00	40.00	50.00
Figures in per cent

Leading refiners have also revised their selling prices upwards with palmolein quoted in the wholesale market at Rs 482-82 per 10 kg from Rs 470-472 per 10 kg on the previous day.

Confusion had prevailed in the market as the government changed its decision in two days, thus leaving the market unstable, alleged a local trader.

The government's rollback decision might have been prompted from the pressure of refiners, the trader said. According to market sources, all moves to control prices would prove futile till the government equalises the duty on crude and refined oil imports. Currently, the import duty on refined oil imports works out 7.5 per cent higher than the crude.

Import duties on sunflower and soybean oil were also reduced by 5-10 per cent from June 23.

However, it is unlikely that Indian producers would be able to import edible oil at lower prices as exporting countries, including Indonesia, Malaysia, Brazil and Argentina, may jack up their selling prices. On earlier occasions, when the Indian government cut import duties, they had raised prices thus almost nullifying the impact on retail prices.

Following the rollback decision, the palm oil futures in Malaysia declined with the most actively traded contract, the October delivery, on the Malaysia Derivatives Exchange ending 4 ringgit, or 0.2 per cent, lower at 2,521 ringgit ($736) a tonne.

India imports almost half of its edible oils needs from countries like Malaysia, Indonesia and Argentina. Total edible oil imports in June stood at 547,361 tonnes compared with 388,278 tonnes a year ago. Total edible oil imports between November-June stood at 2.7 million tonnes, up by 6 per cent from a year ago.

Oilseeds sowing in the country so far this year stood at 12.2 million hectares, up by 4.3 per cent from the corresponding period last year. Groundnut sowing has also increased to 3.35 million hectares (3.15 million hectares) and soybean planting at 7.16 million hectares recorded a growth of 6.4 per cent.