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Oilseed crushing this oil year (November to October) is expected to be lower than last year by 15-20 per cent on the back of higher imports of edible oil and lower arrivals of soybean on the spot markets. Also, only 40 per cent of the total crushing capacity in India is being used due to pricing disparity.
Last year, 33 million tonnes of oilseeds were crushed domestically. The disparity in crushing currently stands at $40 to $50 a tonne, which is not viable for a crusher. Also, the margins have decreased and it has been negligible for the past two years, which has had a negative impact.
“With farmers not bringing stocks to the market and given the disparity and lower global prices of edible oil, oilseed crushing sector is being negatively impacted. There is a glut of edible oil globally due to which it is cheaper to import edible oil than crush oilseeds locally,” said Sandeep Bajoria, CEO of Sunvin Group.
Edible oil imports have been constantly hitting new highs with domestic consumption rising coupled with cheaper international rates of edible oil. Crude palm oil is currently being imported at $650 a tonne and crude soybean oil at $840 a tonne. Indian prices of RBD palm oil price on Kandla port is currently at Rs 55,000 a tonne.
Last oil year, edible oil imports stood at 11.8 million tonnes, which was record imports and this year it is expected to go up to 12.3 million tonnes, which will also be at an all-time high. Domestic consumption of edible oil is rising two-to-three per cent every year.
“This year, around 700,000-700,500 tonnes of soybean is expected to be crushed compared to 1.1-1.2 million tonnes last year. This year, crushing has been impacted in quite adversely. Usually this time of the year, around 60 per cent of edible seeds is crushed but this year it is lower,” said Atul Chaturvedi, CEO of Adani Wilmar.
The sector has asked the government raise the import duty on crude palm oil to make the refining and fats business viable. Owing to a five per cent difference between crude and refined oil, the edible oil business has suffered immensely. Since the edible oil crushing and refining business offers disparity, large players are focusing on value-added segment, where business potential is quite high.
Solvent Extractors’ Association of India (SEA) has asked the government to raise import duty on crude vegetable oil to five per cent from 2.5 per cent currently and refined oil to 15 per cent from 7.5 per cent.
