Domestic prices of major edible oils, mainly soya oil, mustard oil, and palm oil may remain higher this week, mainly on speculative buying supported by firm overseas markets.
Domestic spot prices of soya oil and RBD palm oil in Mumbai have recovered smartly to trade at around Rs 635 per 10 kg and Rs 570 per 10 kg from the previous week.
This was despite the fact that the government had brought down import duties on crude palm oil (CPO) to 20% from 45% and refined palm oil and RBD palmolein to 27.5% from 52.5%.
Mustard oil spot was quoted higher at Rs 608 per 10 kg on continued buying interest, as farmers are holding back stocks expecting high prices due to a production shortfall. On the NCDEX, the soya oil April contract closed higher at Rs 621.50 on Monday, up by Rs 6.60 per 10 kg on speculative buying support.
“The market has remained volatile on duty cut news but overall there is no major impact on the priceline, as major edible oils took a U-turn and prices have recovered in the past two days. Now, traders expect an import duty cut on soya oil from the current 40% to 20%. The market expects this announcement in a day or two,” a local dealer said. The import duties on crude and refined soybean oil were left unchanged at 40%.
“The cut in customs duty by a heavily importing nation is always positive news for exporters, as it indicates strong demand and gives exporters an opportunity to hike prices,” an analyst with Kotak Commodities said.
Along with the lower cost of shipping palm oil, shorter delivery time, and the generally high prices of soy oil, this is expected to give palm oil a clear edge over soy oil in the Indian market, he said.