Duty cut keeps edible oil prices under check
Even as the price spiral in many essential commodities has hit the common man hard, vegetable oil prices, especially palm products, have eased thanks to the 10% import duty cut effected from August 11.
By TNN |
MUMBAI: Even as the price spiral in many essential commodities has hit the common man hard, vegetable oil prices, especially palm products, have eased thanks to the 10% import duty cut effected from August 11. The duty on crude palm oil (CPO) was reduced from 80% to 70% while that on RBD palmolein from 90% to 80%.
Accordingly, the landed cost of RBD (refined, bleached, deodourised) palmolein on August 21 was down to $525 from $530 per tonne on August 11 and that of CPO to $495 from $502 per tonne. During the same period, the FOB (free on board) cost of the two palm products came down from $485 to $477 a tonne and $460 to $447 a tonne respectively.
On August 21, the domestic price of RBD palmolein was Rs 43.9/kg against Rs 45.7/kg on August 10. CPO price (latest data available till August 14) was Rs 40.8/kg, down from Rs 42.7/kg on August 11.
India imports nearly 50-55 lakh tonnes of vegetable oils each year, out of which palm oil products such as CPO and RBD palmolein account for 60%. Remaining imports mainly comprise soyabean oil and sunflower oil. Annual production of vegetable oils is around 75 lakh tonnes.
The question is how long will the duty cuts keep the edible oil prices under check?
With the festival season around the corner the demand for edible oils is set to rise and this could raise prices again. The arrival of the new soya, sunflower and groundnut crops is slated for November, therefore any shortage can only be met if National Agricultural Co-op Marketing Federation (Nafed) liquidates the 28 lakh tonnes of mustard seed, translating into around 11 lakh tonnes of mustard oil, procured during the past two rabi seasons (February-March ‘05 and ‘06), BV Mehta, president, Solvent Extractors’ Association of India, told ET.
“We are of the opinion that if Nafed liquidates the stock at the rate of 5-7 lakh tonnes during August to October, an extra 2.5-3 lakh tonnes of oil per month could be produced, thereby checking domestic prices, said Mr Mehta, adding, “This will also help the industry in better capacity utilisation and by export of additional production of rapeseed meal.”
Heavy rains in Maharashtra have affected the soya crop, but the quantum of damage has not yet been ascertained, Mr Mehta added.
Accordingly, the landed cost of RBD (refined, bleached, deodourised) palmolein on August 21 was down to $525 from $530 per tonne on August 11 and that of CPO to $495 from $502 per tonne. During the same period, the FOB (free on board) cost of the two palm products came down from $485 to $477 a tonne and $460 to $447 a tonne respectively.
On August 21, the domestic price of RBD palmolein was Rs 43.9/kg against Rs 45.7/kg on August 10. CPO price (latest data available till August 14) was Rs 40.8/kg, down from Rs 42.7/kg on August 11.
India imports nearly 50-55 lakh tonnes of vegetable oils each year, out of which palm oil products such as CPO and RBD palmolein account for 60%. Remaining imports mainly comprise soyabean oil and sunflower oil. Annual production of vegetable oils is around 75 lakh tonnes.
The question is how long will the duty cuts keep the edible oil prices under check?
With the festival season around the corner the demand for edible oils is set to rise and this could raise prices again. The arrival of the new soya, sunflower and groundnut crops is slated for November, therefore any shortage can only be met if National Agricultural Co-op Marketing Federation (Nafed) liquidates the 28 lakh tonnes of mustard seed, translating into around 11 lakh tonnes of mustard oil, procured during the past two rabi seasons (February-March ‘05 and ‘06), BV Mehta, president, Solvent Extractors’ Association of India, told ET.
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“We are of the opinion that if Nafed liquidates the stock at the rate of 5-7 lakh tonnes during August to October, an extra 2.5-3 lakh tonnes of oil per month could be produced, thereby checking domestic prices, said Mr Mehta, adding, “This will also help the industry in better capacity utilisation and by export of additional production of rapeseed meal.”
Heavy rains in Maharashtra have affected the soya crop, but the quantum of damage has not yet been ascertained, Mr Mehta added.
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