Edible oil prices flare up on Chicago exchange advise

Baren Bhattacharya

Kolkata, July 15: Prices of all varieties of edible oils have shot up at the local wholesale markets during the past couple of weeks.

According to the list of daily wholesale prices released by Posta Bazar Merchant Association, within a period of two weeks, the prices rose by more than Rs 5,000 per tonne with the major selling category, mustard oil, currently quoting at Rs 38,250 per tonne as against Rs 33,200 per tonne a few weeks earlier.

Following the strong upward trend in the major category, all other edible oils also made an upward rally to the same extent.

The sudden change in the sentiment in the edible oils market stems from the abrupt hike in the prices of RBD palmolein and soya oils in the Chicago Oil Exchange where, in barely 10 days, the prices have shot up by $120 per tonne — from $220 to $340 — at the close of Friday’s (July 12) trading, according to the president of Eastern India Oil Trade & Industries Association, Mr Ashok Sethia.

According to Mr Sethia, it has been reported that the estimated production of palmolein and soy worldwide would see a severe fall during the current season.

The Centre clamped an excise duty of 93 per cent on the imported edible oils in March this year to help indigenous oils survive the threat of cheaper imported oil, Mr Sethia said.

In spite of this, Mr Sethia observed, the prices of imported palmolein and soy were ruling lower than the locally produced oils like mustard and ricebran oils and continued to play a crucial role in influencing the local edible oils market, since India is a oil deficit country.

The sharp rise of international prices coupled with heavy excise duty has already led the importers to stop imports. As a result, the availability of oils is tending to fall. Hence the prices have been shooting up, Mr Sethia says.

He expressed his apprehension that unless the Centre reduced the import duty by at least 50 per cent immediately, the country would see tremendous rise, like in 1999 when the retail price of mustard oil moved up to an all-time high of Rs 75 per kg.