The Hindu Business Line : Global vegoil prices set to decline

They broadly comprised 2.4 lt of crude palm oil; 75,000 tonnes of refined palmolein; 56,000 tonnes of crude palmolein; and 5,000 tonnes of crude palm kernel oil. Among soft oils, crude degummed soyabean oil was 1.06 lt and refined soyabean oil 27,000 tonnes. About 8,000 tonnes of crude sunflower oil too came in.

With this, vegetable oil imports into the country during oil year November 2003 to October 2004 aggregated 44 lt as compared with 51 lt in the previous year. The decline can be attributed to higher domestic production during 2003-04.

The palm complex continued to dominate the import basket with a share of close to 80 per cent, i.e. 34.5 lt of the aggregate imports. During the year, crude palm oil inflows totalled 21.2 lt, largely unchanged from the previous year's 21.5 lt. On the other hand, crude palmolein imports declined to 5.0 lt (12.6 lt) while refined palmolein increased to 7.7 lt from the previous year's 3.2 lt as a result of reduction in Customs duty.

Soyabean oil showed a decline in import volume to 8.5 lt from the previous year's 11.7 lt following a bumper soyabean crop and oil production in India in 2003-04.

Oil year 2004-05 that has begun this month is expected to witness an increase in edible oil imports. On current reckoning, the import volume in 2004-05 can potentially reach 50 lt. The fate of kharif 2004 oilseeds crop is already known— there is a decline from the previous year.

Much depends on the rabi harvest of rapeseed/mustard due by March 2005. In recent weeks, some precipitation in northern parts of the country has eased the anxiety over moisture deficiency.

Subject to normal weather over the next three months, it may not be unreasonable to expect a crop of 55-57 lt of rapeseed/mustard. At this point of time, anything beyond this could be purely speculative, as ground realities including prices do not support any higher crop number. Recent announcement of an increase in minimum support price is not likely to bring about any dramatic shift in acreage.

The global oilseeds market is now flush with large harvests, especially of soyabean. Despite a 44-million tonne increase in oilseeds output, the market has managed to hold and absorb the supply pressure. Palm oil production and stocks too are rising.

According to Mr Pradeep Desai of Palmtrade Services, a reputed trade intermediary, while the demand for palm products from China has held very well, Indian demand may falter from the current month for a couple of months as domestic oils become available in abundance.

``The price spread between palm and soya will have to widen which means when soya oil moves lower, palm will have to fall more in order to keep in step to stimulate demand,'' Mr Desai said adding, "Forward sales January 2005 onwards are negligible and that does not augur well for palm prices."

Crude palm oil prices are most likely to test Malaysian ringitt (MYR) 1,380 a tonne level once again and the downward push coupled with weaker tone in soya complex could take it to MYR 1,300 a tonne, the expert forecast and added, "With China and India in disparity and weak sentiment prevailing, it is highly unlikely that the palm complex will witness any significant rally in the near future."