With an increased uncertainty in the domestic market and weakening international markets, edible oil importers are now reluctant to enter into the new contracts for the imports as prices have fallen considerably by 20-28% in last one month after the duty cut announced by the government.
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%. Therefore, domestic spot prices of soya oil and crude plam oil in Mumbai have come down sharply by 28% and 18.50% to trade around Rs 570 per 10 kg and Rs 459 per 10 kg on Monday, respectively, over last month.
Import duty cuts and weakening world prices have severe impact on domestic prices in the wholesale market, sources said.
In the world market, Soya oil degummed prices fell sharply by 18% to hover around $1,355 per tonne (CIF basis) as on April 7, 2008 while crude palm oil too slipped by 15% to quote at $1,145 a tonne (FOB) on April 7 over last month.
“Importers are reluctant to enter into the new contracts for the imports of edible oils. This may deplete the stock in the pipe line and if not replenished in time, domestic price may begin to move up by next month,” Ashok Sethia, president of Solvent Extractors’ Association (SEA) said.
The edible oil manufacturers have passed on the benefit of duty reduction to the consumers and the sale price has been reduced by the manufacturers by about Rs 5 to 7 per kg in last one month but the uncertainty about restrictions on future trading and likely implementation of storage control order by the State government has pushed the market into a total doldrums stage, he said.