Palm oil and soybean oil reached records today amid concern China may buy more edible oils after the worst snowstorms damaged its rapeseed crops, worsening a global shortage of cooking fats. Record prices may force the government to cut the import tax on the commodity when it announces its budget later this week.
Even if the duty is reduced the exporting countries will jack up the price and the real benefit may not accrue the Indian consumers, Sethia said in a note to the groups members. The government must instead import more edible oils to ease prices, he said. The duty was cut four times in 2007. Palm oil on the Malaysia Derivatives Exchange, the global benchmark, rose as much as 216 ringgit, or 5.8%, to 3,914 ringgit ($1,217) a metric tonne, the biggest intraday gain since November 20, 2006. The most-active contract for May delivery ended the morning at 3,905 ringgit a tonne.
Soybean oil futures on the Chicago Board of Trade rose as much as 2.1% to a record 64.37 cents a pound. Futures for May delivery on the Dalian Commodity Exchange in China surged by the 4% daily limit to a record 13,188 yuan ($1,846) a tonne.
Indias edible oil imports rose 16% to 1.08 million tonne in the three months ended January from 932,214 tonne a year ago, according to the Solvent Extractors Association. Purchases in the year to October may reach 5.9 million tonne, compared with 5.6 million tonne a year ago, Sethia said last month. The country meets almost half its domestic edible oil needs through imports.