The holding up of imported edible oil consignments in Indian ports for nearly two weeks has led to drying up of supply pipepline temporarily and steps are being taken to release them at the earliest.

On Monday, Food and Public Distribution Secretary Sudhanshu Pandey had said some edible oil stocks are being held up in two Gujarat ports – Kandla and Mundra – because of delay in some tests meant for general risk analysis.

“We have addressed this problem along with Customs and Food Safety and Standards Authority of India. We hope that with this quantity getting released in the market there would be some softening impact on edible oil prices,” Pandey had told media persons.

Authorities at these ports admitted that some quantities of crude palm oil, refined palm oil and soya oil are under process for clearance. Trade sources said that government’s initiative of faceless customs clearance has glitches leading to the delayed clearances of the goods at ports.

Dried pipeline

“There seems to be initial teething troubles following the implementation of faceless clearances. But this has stalled the supplies to the edible oil pipeline. As a result, there was a delay in processing and supply of oils in the market,” said BV Mehta, Executive Director, Solvent Extractors’ Association of India (SEA).

SEA has also represented to the Centre seeking resolution to the issues, being experienced since past one month.

“The quantities stuck at the ports are equivalent to the 10-15 days worth of processing capacities. This will only delay the processing thereby creating supply concerns in the market,” said an edible oil processor from Gujarat.

Bulk demand suffers

Mehta also said that India had imported total 13.2 million tonnes of edible oil worth $10 billion during 2019-20.

Of the overall domestic consumption, 42 per cent or 95,85,000 tonnes is palm oil, whereas 20 per cent or 46,88,000 tonnes is soyabean oil, followed by mustard oil and sunflower oil.

Major segments for palm oil consumption is Hotel Restaurants and Catering (HoReCa) segment, with 33 per cent going to it.

Price trend

Sandeep Bajoria, CEO of Mumbai-based Sunvin Group, said the release of consignment will improve the supply flow and also soften the prices, but not to a great extent. According to him, nearly 4 lakh tonnes of supply is lying at the ports at present.

Bajoria said with almost 65 per cent of the country under some kind of lockdown, palm oil consumption is expected to reduce by 1-1.5 lakh tonnes per month from the usual 8.5 lakh tonnes. This is mainly because of there is a dip in consumption in HoReCGa segment, which accounts for 55 per cent palm oil consumption.

It is also believed that while there is an upward price pressure in the international market, the easing of supplies from the ports will not significantly help reduce the prices in the domestic market.

As per the SEA data, import price for RBD palmolein has jumped from $611 per tonne (CIF Indian Port) in March 2020 to $1,075 in March 2021. Other oils including crude palm oil, crude soyabean oil, crude sunflower oils and crude rapeseed oils also witnessed a similar or sharper rise in the prices.

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