The Hindu Business Line : Crop, prices slow vegoil imports

The pace of edible oil imports continued to remain sluggish in the face of new domestic crop pressure and modest local sales. Arrivals since the beginning of the new oil year in November 2005 have declined by a quarter as compared with corresponding period previous year.

Vegetable oil arrivals in February aggregated 2.69 lakh tonnes, as per data released by the Solvent Extractors Association of India. This comprised broadly, 1.33 lakh tonnes of crude palm oil; 92,700 tonnes of crude soyabean oil; 21,500 tonnes of sunflowerseed oil; about 12,000 tonnes of refined palmolein; and 8,000 tonnes of crude olein.

With this, in the first four months of oil year 2005-06, vegetable oil imports totalled 10.5 lakh tonnes, down from 13.5 lakh tonnes during the same period in the previous year.

A decent harvest of rabi oilseeds including rapeseed/mustard crop of 68 lakh tonnes in addition to stock of 15 lakh tonnes with the Government is adding to supply pressure, even as crushing margins are reported to be unattractive. Export demand for rapeseed meal is constrained by low prices ($105 a tonne or thereabouts).

Players are waiting for April 1 when the new export/import policy will be announced. Many expect that the `Target-Plus' scheme, which is suspected to have introduced distortions in the market, would be done away with. Sentiment in the international market too is weak. Crude palm oil is at less than Malaysian ringgit 1500 a tonne, while soyabean oil shows no signs of rallying due to South American crop size and large arrival pressure.

At over 1.6 million tonnes, crude palm oil stocks are weighing heavily on the market. Enthusiasm over potential demand for bio-diesel is yet to translate into actual demand. May would be a crucial month for the market to take a decisive turn.

Soyabean planting intentions in the US and southwest monsoon forecast for India need to be watched.

The Food Minister has reportedly talked about imposing quantitative restrictions on vanaspati imports from Sri Lanka. How far and how soon he would succeed is anybody's guess.

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