"We will ask STC to procure either palmolein or soft oilslike sunflower and soyabean oils to take advantage of the price differentials," secretary, sugar and edible oils in the food ministry RP Sinha said.

STC, the official procuring agency had last year imported 1.5 lakh tonnes of palmolein from Malaysian markets, despite lower prices of softoils in counties like Argentina and Brazil.

Sinha said with the devaluation of Brazil's currency, real, STC could procure at lower prices and save substantial foreign exchange.

Cabinet has already taken a decision to allow STC to import upto one lakh tonnes of oil for supply through the public distribution system (PDS).

According to industry sources STC's flexibility to buysoft oils will help further push down the prices of palmolein inboth the Malaysian and Indonesian markets.

Sinha said shortage of edible oil in the domestic market would be to the tune of 12 to 14 lakh tonnes as the demand was expected to be 82 lakh tonnes as compared to an expected edible oil supply of 68-70 lakh tonnes.

Prices of various edible oils were expected to be under pressure in the next few months as fresh soyabean and rapeseed/mustad crops had started arriving in the markets, the secretary said.

"Besides the new crops arriving in the markets now, at least four to five lakh tonnes of imported oils should be available inaders or hoarders," Sinha said.

Government, he said was keen to evolve an integrat ededible oil policy to take care of the interest of solvent extractors, oilseed growers, vegetable oil traders, vanaspati manufacturers and the consumers.

"We intend to soon formulate an integrated edible oil policy to address divergent interests of various sections," Sinha said.

The Solvent Extractors Association (SEA) has projected more than 24 lakhtonnes of edible oil imports to bridge the gap between domestic supply and demand.

The bearish outlook in the prices of most of the edible oils have led to demands from the domestic industry, both growers and traders, for a hike in edible oil imports duty.

However, sinha said government was yet to assess the actual impact of imports on prices.

While the prices of sunflower has dropped from Rs 38,600 tonne to Rs 29,300, soyabean and palmolein prices dipped to Rs 30,000 and Rs 32,700 a tonne from Rs 35,000 and Rs 41,000 a tonne respectively.