The Hindu Business Line : Palm oil market abuzz with duty cut talk

ANXIETY has gripped the vegetable oil trade with reports of imminent reduction in customs duty doing the rounds in the market. Official statements pointing to inflation concern have fuelled speculation over the possibility of a reduction in customs duty on crude palm oil which at present is 80 percent ad valorem.

While locally prices have come under pressure, even as buyers and sellers have kept trade deals on hold, Malaysian offers for crude palm oil are already up by some $ 7 a tonne.

In reality, however, there is no case for a duty reduction at this point of time. The kharif oilseeds harvest and market arrivals are on going on in full swing. In addition, that National Cooperative Agricultural Marketing Federation (Nafed) is holding as much as 15 lakh tonnes of rapeseed/mustard procured a few months ago.

Prices of oilseeds and oils have not displayed any distinct upward movement. If anything, soyabean prices are below Rs 12,000 a tonne and soya oil at a consumer-friendly level of Rs 350-360 per 10 kg trading lot.

Conceding that edible oil has a high weightage in consumer price index, there has not been any notable consumer concern relating to edible oil prices. Therefore, there is little justification for a reduction in duty at this point of time, argued traders.

Interestingly, reports of imminent reduction in duty have originated from abroad - Singapore and Kuala Lumpur, to be sure. Often, in the past, these reports have proved absolutely right. Overseas interests seem to be getting inside information from the Indian government 24 to 48 hours in advance.

It is also suggested that some importers who bought large parcels are now playing the market by floating such "reports" of duty reduction. Customs duty reduction in India invariably helps overseas suppliers raise the offer price, thus neutralising the effect.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
AP strives for low crop costs, improved productivity: CM

Exit agriculture, enter services

Buying keeps rubber steady

Coonoor tea trade volumes slip

Gold may consolidate, rise

Heritage Foods net up

Palm oil market abuzz with duty cut talk

CCL net rises to Rs 15 cr

Rs 7/kg subsidy for pepper export