Govt cuts palmoil, soyoil base prices

The government today cut the import tariff value, the base price at which import duty is levied, on palmoils and crude soyoil. The change in tariff value has come after the industry made a hue and cry following a $50 a tonne price disparity, with domestic prices reigning higher than overseas prices.

"This tariff cut is not likely to bring down prices in the domestic market as correction was required in all edible oils," said Sandeep Bajoria, president of The Central Organisation of Oil Industry and Trade.

While the change in landed cost of crude soyoil is Rs 3 per 10 kg, that of crude palm oil is Rs 6 per 10 kg. Today, spot price of crude soyoil (ex-Indore) stood at Rs 325 per 10 kg, down Rs 2 from previous close. Spot price of crude palm oil (ex-Kandla) was at Rs 335 per 10 kg.

"The market may see a slight fall of Rs 1-2 per 10 kg in both soyoil and palm oil in early trade Tuesday. It will, however, recover soon after that," said an analyst with Mumbai-based IL&FS Investsmart Commodities.

Industry experts also feel that tariff cut announced are lower than market expectation.

The government sets the tariff value on palm and crude soybean oils. Tariff value changes, basically was to be administered in tandem with a minimum 10 per cent change in international prices but the government, for last two months now, has been making changes on a fortnightly basis.

Seemingly, duty revision is now coming in on a fortnightly basis""on the 15th and the last day of the month""and this schedule was followed for October and November only. December, however, saw traders wait for the downward tariff revision as international prices fell and tariff continued to tread higher.