Edible oil prices decline 20-25% in one month

Edible oil prices in the domestic market have crashed by 20-25 per cent in the last one month following the customs duty cut and softening of international rates. The arrival of rabi oilseeds has also impacted the prices.

While the freight on board (FOB) price ex-Indonesia for crude palm oil declined by 7.63 per cent ($1,245 to $1,150 a tonne) between March 7 and April 8, the landed price for same at Indian ports decreased by 8.94 per cent (1,285 to $1,170 a tonne). Similar price changes have occurred in other edible oils. 

HIGH WEIGHTAGE Average prices in Delhi
Rs/kg	Mar-07	Apr-08
Mustard oil	75	60
Soyabean oil	75	60
Vegetable refined oil	70	55
Vanaspati*	70	55
* Rs per litre

"The price outlook is expected to remain stable in the near future. However, any increase in international prices could lead to a change in scenario since we are heavily dependant on imports," said Satnarain Agarwal, president, Rajdhani Vegetable Oil Traders' Association.

On March 20, the government reduced customs duty by 20-55 per cent on various categories of edible oils. As inflation hit a 13-month high of 6.68 per cent for the week ended March 15, the Cabinet Committee on Prices (CCP) on March 31 decided to make imports of all crude edible oils duty free while cutting the import duties on all refined oils to a uniform level of 7.5 per cent. The country imports 45 per cent of its edible oil requirements.

This measure was preceded by a ban on edible oil exports. Edible oil has a weightage of 2.76 per cent in the Wholesale Price Index "" which is higher than cement (1.73 per cent), wheat (1.38 per cent) and rice (2.45 per cent). As it is being used everyday, the rising prices have been affecting the common man.

Mustard seed prices have declined from Rs 2,800 to Rs 2,400 a quintal in the last one month due to arrival of the rabi crop.

The second advance estimates released by the agriculture ministry in February puts this year's rabi oilseed production at 9.59 million tonnes, down 6.7 per cent over last year.