The Hindu Business Line : Cottonseed oil at 10-year low

EDIBLE oil prices within the country are continually sliding amid expectation of a large rapeseed/mustard crop and weak international prices, especially of soyabean and palm oils. The worst hit is washed cottonseed oil.

Price of this oil has dipped below the psychological mark of Rs 300-per-10-kg trading lot and is currently quoted at Rs 295. A month ago, the oil was trading at Rs 350 and a year ago at about Rs 430.

``Washed cottonseed oil price has touched a 10-year low,'' said a trade intermediary. A bumper crop of cotton this season has augmented seed supplies. The oilseeds trade has projected a marketable surplus of 56.2 lakh tonnes cottonseed during 2004-05 season versus 43.4 lt last season. On this basis, washed cottonseed oil availability is estimated at a new high of 6.2 lt, up from 4.8 lt of last year.

Low prices are expected to encourage use of cottonseed oil for manufacture of vanaspati. Crude palm oil, the popular raw material for vanaspati, is quoted higher at Rs 315. Soyabean oil prices too have been facing downward pressure. In the last four weeks, the market for refined soya oil has declined by Rs 50. The oil is currently offered at Rs 355 per 10 kg (excise duty and taxes paid).Groundnut oil, too, is rather soft at Rs 438/10 kg.

Sliding vegoil prices are sure to warm the hearts of consumers and encourage consumption. Use of edible oil rises during the winter months. The market has been expecting a downward revision in tariff values of imported oils to reflect falling international prices.

There is now an apprehension that a reduction in tariff values at this point of time can further depress the domestic market, while encouraging palm oil producers to jack up prices, an opportunity they are waiting for.

Palm oil stocks are now in excess of 1.5 million tonnes and the market is hovering around Malaysian Ringgit 1,300 a tonne. Excellent soyabean crop conditions in South America (Brazil, Argentina) are seen exerting a bearish pressure on the international market.

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