External factors such as appreciation of the dollar and firm global prices of edible oil, coupled with surging crude oil prices seem to be eroding the impact of the import duty cut, which was intended to cool the prices in the domestic market.
In the past couple of weeks, the prices of palm oil, refined soyoil, cottonseed oil and mustard oil have surged around Rs 35-50 for a 15-kg container. Palm oil prices have risen to Rs 900 per 15-kg, which had touched a low of Rs 850 in the second week of April following the import duty cut.
Similarly, prices of soyoil have surged from Rs 950 per 15 kg to Rs 980-990. Cotton seed and expeller mustard oil prices have surged to Rs 95 and Rs 990 from Rs 910 and Rs 950, respectively, in the last fortnight.
However, groundnut oil prices have remained stable around Rs 1,110 -1,125 per 15 litres.
"Though edible oil prices turned weak on last Tuesday, the prices kept increasing in the week. The prices have surged on the back of firm global prices of edible oils," said Pratap Chandan, president, Gujarat State Edible Oil Merchants Association.
According to market estimates, prices of crude palm oil have galloped from $936 per tonne in December 2007 to $1,260 per tonne in February end in the international market. On the other hand, crude soyoil prices have moved up to $1,480 from $ 1,119 in the same period.
Apart from hardening edible oil prices globally, there are other factors which have contributed in fuelling the prices in the domestic market. Recently, the value of dollar has sharply appreciated against the rupee, which has resulted in increase in import costs.
Also, crude prices touched a record forcing transporters to increase sea freight. All these have led to hike in the landed cost of edible oils locally, said Suresh Shah, president, Ahmedabad Oil Merchants Association.
However, industry players and traders admit that the prices would have been 30 per cent higher without the Centre's import duty cut.
