Festivals notwithstanding, traders and hoarders find themselves gripped in this slippery situation. Fearing excess of unsold stocks of edible oils after the festivals, they have began dehoarding their stocks at considerably low prices.

During the 11-month period to September 1999, a total of 38.63 lakh tonne of edible oils have been imported, which according to The Solvent Extractors Association (SEA) of India is over 124 per cent higher than 17.24 lakh tonne imported during the same period last year. SEA president Sandeep Bajoria feels the country will end the oil year with a total imports of 43 lakh tonne valued at Rs 9,000 crore. With abundant supplies, edible oil prices may fall further after the festivals. Traders say, despite Deepawali festivals, the retail demand for edible oil has remained abysmally low compared to earlier years.

In Mumbai, for example the price of groundnut oil, the principal cooking medium, however, has declined by around Rs 64 per 10 kg (from Rs 435 in January to Rs 370 per 10 kg currently). Both soyabean and palm oil prices have slipped by over Rs 100 per 10 kg--soyabean oil by Rs 107 to 238 per 10 kg (from 342 earlier) and palm oil by Rs 141 to Rs 200 per 10 kg (from 341 earlier).

In Ahmedabad, groundnut oil which rose to Rs 460 in the last August has slipped to Rs 385 per 10 kg currently. Imported palm oil also fell to Rs 195 per 10 kg, threatening to breach all time low of Rs 190 seen in July this year.

According to traders, China has stayed away from purchasing edible oils from the international markets since quite sometime and Pakistan is entangled in the political crisis. This has resulted in more than sufficient palm oil in the Malaysian and Indonesian markets. With low import duties at around 15 per cent, the inflow of palm oil in the country has remained unabated since the past few months, benefiting the Indian consumers during festivals with low edible oil prices for the first time in many years. Further traders say, the international market is likely to be flooding with more oil supplies, as both Brazil and Argentina are all set to produce bumper soyabean harvest and the American soya crop is also seen good despite affected by draught in Texas.

"Being in the bargaining position, Indian importers should capitalise on their bargain capacity and try for the better prices," traders feel.

"As both China and Pakistan being large buyers, Indian edible oil importers are now in the driver's seat," said Prem Das of Vishal Exports, a commodity trading firm.

"Earlier, Malaysian traders used the China card, to jack-up the prices by spreading reports that China is buying, threatening other smaller players that prices will go up".

Though discomforted on the domestic market, Indian importers have emerged as dominant players in the Kuala Lumpur Commodity Exchange (KLCE). Because of the earlier fear of China, Indian traders had consigned more oils fearing rise in prices. It is this stock which is being offloaded currently at "throw-away" prices.

According to Das the import trade is currently passing thorough one of the worst phase. Besides falling prices, another problem has arisen.

"Overseas traders do not ship the contracted goods, if the deal is not in their favour. Earlier they alleged that Indian buyers are not lifting the contracted goods if there was a price rise. Now a section of Malaysian shippers are adopting unhealthy trade practice," said Das.

Continued inflow of edible oil has forced the traders to not just dehoard their stocks, but even resort to price undercutting tactics. A group company belonging to Gujarat-based super star trading house has started price undercutting confusing the local market operators.

Large supplies of soyabean seen from Argentina and US
In the wake of record oilseeds production, the soya futures traded at Chicago Board of Trade (CBoT) tumbled to the contract low of $4.63 a Bushel, amid funds' long liquidation. It pared earlier loses following stray buying. Despite adverse weather in some parts, the USA is likely to produce near record of soya crop. The US soya harvest was 86 per cent completed on last Sunday against last five year's average of 78 per cent.In Brazil, the planting season has begun.

The Brazilian government in its official forecast has said current crop would be 31.44 million tonne against last year's 30.5 million tonne. Following last weeks rainfall in the dry areas crop scenario has brightened.Though the bean futures fell, funds are still long, as per the Commodity Futures Trading Commission (CFTC) reports, funds held 32,609 long futures and options contract in bean and 11,281 shorts for a net long positions of 21,328 contracts. Net non-commercial long position was 18,706 contracts.However, late selling may reduced thelong positions to less then 19,000 contract, it is believed.Malaysian palm oil recovered from the earlier low as, two cargo from Indonesia had been blocked in the Rotterdam due to diesel contamination, which helped sentiments. The January 2000 futures was traded around 1,196 ringit ($314.74 per tonne). The 1,180 ringgit level is seen as a key support.