A lot of April-May contracts are still not executed, besides several importers have yet to receive their dues from retailers. If prices fell further, and importers don't get their dues, the situation could turn out to be a major setback for trade.

Importers were tight-lipped on the likelihood of defaults. ``The RBD Palmoiln is quoted as low as $390 a tonne at Kuala Lumpur Commodity Exchange, while soft crude oils like soya and sunflower of Latin America origin are offered around $378 a tonne for June and $380 for July delivery.

Landed cost of soft oil translates into Rs 22,500-22,700 per tonne. Palm oil is being quoted around $390 per tonne June to December. Lack of premium in forwards indicates that market is anticipating further fall in prices. Though there arefears of payment defaults it is difficult to estimate, traders said.

If defaults take place it will be on a large scale,'' said Prem Das, commodity trader with Vishal Exports, Ahmedabad. Importers are keen to settle open deals mutually. Forward deals of soft oils like soya were dealt at around Rs 207. In the wake of possible payment defaults a few leading importers have urged importers to refrain from forward deals, however, such deals are rampant.

It is worth noting, Palm oil lost 110 in just one month. It fell to $390 per tonne in the last week, a 22-month low. Prices have fallen more than 40 per cent since the beginning of the year. According to traders, the route cause of payment problem is havala holders. They are not honoring their earlier commitments. Retail traders are not lifting the oils as per commitments.

It has become a common practice, especially among northern traders, when deals become unprofitable, some rogue traders simply refuse to pay. With the onslaught of monsoon some importersseem in a hurry to offload their inventory.

Parallel futures recover

Parallel oil futures traded at various centers recovered on trade buying. Mustard oil futures traded at Ganganagar recovered to Rs 284 from last week's Rs 277, while Bikaner mustard futures improved to Rs 474 from the last wek's low of Rs 461 per 15 KG. The hybrid future of Soya-palm traded at Indore was quoted at Rs 264 per 10 kg on the last week. Except Akola cotton cake futures entire oil complex remain bearish.

Favorable monsoon reports and sluggish spot markets have encouraged speculative selling in futures, however, contrarion traders are prefer to go long, it seems. Although the mood seems bearish, it is not advisable to go short at such a low prices, said a speculator. The current bear trend may last till the rain starts. Price would pick up once the rain starts.

According to a speculator, drastic cut in the acreage is likely in the coming oil year. Farmers may switch over to other crops due to unremunerative seedprices. Almost all the edible oils are quoting at much lower level from their historical high.