Edible Oil Imports Set To Surge

Mumbai, July 29: | Updated: Jul 30 2002, 05:30am hrs
Poor monsoon, partly due to El Nino, is likely to see a sharp decline in the overall availibility of oilseeds this kharif season. If the rain gods don’t smile in the next fortnight, this could lead to a substantial jump in edible oil imports by the year-end, thereby pushing up the country’s import bill, said sources from the edible oil importing community.

Edible oil features among the top five items on the country’s import list which is topped by crude oil. During 2000-01, vegoils worth Rs 8,000 crore were imported, which under the current “precarious” conditions, could see its import bill jump considerably. Importers and seed traders here say there could be 50-80 per cent decline in the current kharif’s oilseed production which, for soya is pegged at five million tonne.

Ahead of the usual rise in vegoil demand for festive season, higher imports would commence from mid of next month, traders said.

“The current situation is definitely a cause of concern for the vegoil sector,” said Bombay Commodity Exchange’s president PM (Mangal) Chheda. “Even if the rains do come over the next one week to a fortnight’s time, it connot meet the gap in oilseeds availability in the country”.

The country annually grows around 173.7 lakh tonne oilseeds of which the highest of around 57 lakh tonne is for groundnut, followed by soyabean (50 lakh tonne) castorseed (8.5 lakh tonne); sesameseeds (7 lakh tonne) and rapeseed/mustard (37 lakh tonne). Of this, kharif is placed at around 87 lakh tonne, and the balance for rabi oilseeds crop. This kharif, the oilseeds crop could be lower by around 10 per cent, which industry sources say is huge.

Reflecting on the possibility of a shortage in oilseeds availability, vegoil prices have already begun to stiffen since the past couple of weeks, both in the domestic and international markets. In the month of July for example, prices of vegoils have shot up by around 10 per cent in the domestic and the international markets.

The Solvent Extractors Association of India’s (SEA) executive director, BV Mehta said, “besides the domestic crisis of drought that will hit the oilseeds production, it is the international situation that will play truant with prices in the coming months.”

According to All India Cotton Crushers Association’s (AICCA) chairman, Sandeep Bajoria, “the impact of the current drought will be felt towards the year-end (during November 2) to February 2003 in the form of higher vegoil imports.”

Given the overall shortage in oilseeds, soyaoil and palmoil prices could jump by around 30 per cent towards the end of the year, said BCE’s director, Kushal Thakkar.

In the domestic market too the prices of palm oil have risen to Rs 325-328 per 10 kg level agianst the Rs 310-315 per 10 kg level in the beginning of the month. This is on the back of the price trend of palm oil on the Kuala Lampur Commodities Exchange (KLCE) which have risen to 1,450-1,460 ringit per tonne level agianst the 1,300-1,320 ringit per tonne level at the beginning of the month.

The trend in the Soyoil prices, in the international market was the similar to the domestic market wherein the zoomed by 7-8 percent in tandem. Currently the prices of Soyoil in the domestic market is quoting at Rs 330-335 per 10 kg level, from the earlier level of Rs 310-320 per 10 kg level. On the Chicago Board of Trade (CBOT), the prices have spurted to $1,950-1,970 per tonne level, agianst the earlier level of $1,820-1,840 per tonne levels.