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G. Chandrashekhar

MUMBAI, Oct. 2

NOT unexpectedly, edible oil imports during September have shown a massive increase over the previous month and, indeed, over the previous 12 months. It was as far back as August 2001 that monthly imports were last more than six lakh tonnes.

Quick estimate prepared by Oilmandi.com, an industry portal, showed aggregate inflow of 6.24 lakh tonnes last month, up from 4.52 lt of August. Arrivals broadly comprised, degummed soyabean oil 2.77 lt; crude palm oil 2.01 lt; and crude olein 1.37 lt. The rest was accounted for by crude palm kernel oil.

With this, vegetable oil imports into the country during November 2001-September 2002 totalled 40.5 lt, down from 45.4 lt during same period in 2000-01.

On current reckoning, projected imports for October would be 3.5 lt, according to Mr Dilip Kumar of Tapasya Trading Co. This will take the annual import to 44.0 lt, down from 48 lt during oil year 2000-01. Commenting on the current market condition, Mr Pradeep Desai of Palmtrade Services, a reputed market intermediary, said stocks in the pipeline and at the ports are dwindling rapidly due to lack of any replacement buying.

A huge disparity between domestic and international prices for all imported oils has developed. Current domestic market prices are anything between Rs 1,000-4,000 a tonne lower than the landed cost, applying the specified tariff value for various oils.

``The question is how long this situation can be sustained. The domestic oils cannot cover the entire consumption needs even at the peak crush. Price parities have to revert soon to allow replacement buying to commence in right earnest,'' Mr Desai observed.

If replacement buying to the extent of about 2-0-2.5 lt does not happen this month, a serious oil crunch could develop towards the end of the year, it is apprehended. The process of realigning the Indian market with international parities can get a helping hand if the government decides on two issues quickly.

The tariff values of crude soyabean oil and various palm oils will have to be in line with current markets. In particular, tariff value of $542 a tonne for crude soyabean oil has already led to a sharp reduction in Indian purchases. Current quotes for the commodity are around $500 a tonne cost and freight India.

In addition, the Government must abide by its commitment to WTO and release the tariff rate quota for sunflower oil and rapeseed oil (1.5 lt each) at concessional rate of duty. It is six months since the new fiscal year commenced, and yet there is no trace of the notification from Director General of Foreign Trade.

With limited purchases from India and rising production, palm oil stocks in Malaysia are rising with concomitant impact on prices. However, production increases are likely peter out after October and prices could potentially start moving up. It is necessary for India to build enough inventory of oil at reasonably low prices.

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