The Hindu Business Line : Edible oil imports surge in April

THE month of April witnessed a surge in edible oil arrivals, the highest in the last seven months. According to preliminary data made available to Business Line by the industry portal oilmandi.com, imports in April totalled 5.67 lakh tonnes, up from 2.5 lt of the previous month and up from the monthly average of 3.5 lt since the beginning of the oil year November 2004.

Last month's imports comprised, broadly, 3.43 lt of crude palm oil; 32,000 tonnes of crude palmolein; 12,000 tonnes of refined palmolein; 1.48 lt of crude de-gummed soyabean oil; and 29,000 tonnes of refined soyabean oil. In addition was 3,000 tonnes of crude palm kernel oil.

With this, vegetable oil imports in the first six months of the oil year 2004-05 have reached 22.4 lt, considerably higher than 18.2 lt received during the corresponding period in the previous year.

The second half (May-October) of the oil year usually witnesses 35-40 per cent increase in vegetable oil imports over the first half, because of a manifold rise in demand on account of festivals. Thus, aggregate imports for the oil year 2004-05 are projected at over 50 lt.

The domestic edible oil market has been going through a bearish phase for several weeks now with prices steadily softening. In the Mumbai wholesale market, raw groundnut oil is quoted as low as Rs 450 per 10 kg trading lot, while refined soyabean oil is traded at Rs 376.

Harvest of a large crop of rapeseed/mustard and huge arrival of imported oils together with weak overseas advices have left the market vulnerable. At present, the demand-supply fundamentals suggest that the market is in a state of balance.

Globally, the price surge is now curbed by supplies of soyabean and oil from South America and crude palm oil inventory build-up in Malaysia. Therefore, prices would move sideways, and be range-bound for sometime.

Players in the international market are, at the moment, unsure about the direction the market would take. There are those who strongly believe that the soyabean market has to break significantly, and there are also those who assert that the market is just beginning to enter the period of a long rally.

In the domestic market, summer season usually depresses demand for cooking oil. Traders are waiting for direction as there is no major price impacting factor at work. The onset and initial advance of southwest monsoon will be closely watched. The recently announced minimum support price for kharif season oilseeds marks a modest hike.

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