India’s decision to allow imports of 40 lakh tonnes (lt) each of crude soyabean oil and crude sunflower oil during the current fiscal and the next dragged global palm oil prices lower on Wednesday.
Palm oil futures for August and September delivery dropped by over 1.5 per cent each on the Bursa Malaysia Derivatives market. The August contract declined by 93 Malaysian ringgits (MYR) to 6,389 MYR a tonne ($1,453.70), while the September contract slipped by 103 MYR to 6,203 MYR ($1,411.38).
Palm oil prices had been ruling steady until the Indian government’s move to allow the imports free of any customs and agri infrastructure cess duty as part of its measures to control soaring inflation and also tame surging edible oil prices.
In a notification issued on Tuesday, the Finance Ministry prescribed a ”tariff rate quota” (TRQ) under which an import of a quantity of 20 lakh tonnes (lt) each of crude soyabean oil and crude sunflower oil per year will be allowed for two years at a nil rate of customs duty and Agricultural Infrastructure and Development Cess. The importing will be done during 2022–23 and 2023–24 fiscals.
Though palm oil prices were expected to drop from Monday (May 23) after Indonesia decided to lift its ban on the export of crude palm oil and refined, bleached and deodorised palm oil, lack of clarity on the decision kept the rates firm.
The duty cut also resulted in some industry officials estimating palm oil imports by India to drop to an 11-year low this season to October. A major reason for this is that palm oil prices have ruled almost at par with soyabean oil, forcing Indian importers to look for the latter from South America.
Tuesday’s decision to allow the duty-free imports will see prices at retail outlets coming down by ₹3-4 a kg only after a month since these imports take a month to reach Indian shores, said BV Mehta, Executive Director, Solvent Extractors Association of India (SEA).
Sudhakar Desai, President of the Indian Vegetable Oil Producers’ Association (IVPA), said both these oils will take two months to arrive and any reduction in the price will be seen only after a month-and-a-half.
On the other hand, representatives from the edible oil industry on Wednesday said the government’s decision to allow duty-free import of crude soyabean oil and crude sunflower oil is aimed at providing some relief to the consumers affected by high food inflation.
Atul Chaturvedi, President of SEA, said it seems the government has taken this decision to provide some relief to consumers in this volatile market and to check inflation.
Desai said it is a measure to reduce the prices of soyabean and sunflower oil.
Referring to the TRQ for imports, he said: “We have to wait for the procedure and process on quota system application.”
BV Mehta said the government has taken a decision to allow duty-free imports of soyabean and sunflower oil to bring down food inflation. It was a compulsion for the government because of the high food inflation.
Stating that India imports around 18-20 lt of soyabean oil a year, he said discussions are on the trade and others concerned on the TRQ procedure.
The all-India retail price of soyabean oil was ₹171.08 a kg on May 24 as against ₹165.95 a kg a month ago, an increase of 3.09 per cent. However, the increase was around 14.72 per cent when compared to last year’s figure. The all-India retail price of soyabean oil was at ₹149.13 a kg on May 24, 2021.
The price of soyabean oil was maximum at ₹196 a kg in Delhi on May 24, as against ₹159 a kg a year ago.
The all-India retail price of sunflower oil was ₹192.83 a kg on May 24 as against ₹187.33 a kg a month ago, an increase of 2.94 per cent. The increase was around 12.88 per cent when compared to last year’s figure. The all-India retail price of sunflower oil was at ₹170.83 a kg on May 24, 2021.
The price of sunflower oil was maximum at ₹216 a kg in Delhi on May 24, as against ₹196 a kg a year ago.