Seven agri comms futures down 2-4%, edible oil cos may cut price

As an immediate impact of the government?s move to bring down import duty to zero level and to ban exports of non-basmati rice and pulses, futures prices of major agri commodities on the national bourses on Tuesday hit lower circuit of 2-4% on seven major agri-commodities on increased selling pressure by speculators.

The commodities include chana, soya oil, mustard oil, maize, potato, chilli and castor seed.

The reduction of import duty on crude edible oils to zero level is a big surprise to the industry, but major edible oil processors have decided to cut their selling prices by Rs 3-5 per kg on various oils such as soya oil, mustard and palm oil.

Major companies like Ruchi Soya and KS Oils have already announced its price cut which will be passed on to the consumers with immediate effect.

?The government?s move to bring down duty on edible oils to zero level is a step in the right direction to curb inflation and bring down the prices of edible oils to affordable levels for the consumers,? Ramesh Chand Garg, Chairman, KS Oils Ltd said.

The duty cut will result in price reduction of Rs 3-5 per kilo. Soya oil will see the maximum reduction of Rs 5, followed by mustard oil of Rs 3.

According to managing director of Ruchi Soya Industries Ltd (RSIL) Dinesh Shahra, ?The impact of duty reduction in the case of soya oil will be Rs 4 per kg and in case of palm oil; it will be Rs 3 per kg. Since the market is highly volatile due to recent USDA report, the company shall wait for a week?s time for market to stabilize and thereafter, the above reduction in duty shall be passed on to the consumer.?

The government on Monday night announced a slew of measures, including drastic cut in import duty of edible oils, banning export of non-basmati rice and ban on export of pulses for another one year. India exports about 3 million tonne of non-basmati rice annually.

?Prices in the domestic market will stabilise and supply situation will improve as the government has immediately put ban on exports of non-basmati rice last night to increase availability of food-grain in the country. Prices of non-basmati rice have already increased by nearly 15% in the first three months of 2008,? VK Chaturvedi, managing director, Usher Agro said. ?The government step to hike Minimum Export Price (MEP) of basmati rice will no have much impact on the price level,? he said. The step to ban export of pulses from the country will have much impact on the domestic trade, market sources said.

?We are currently exporting only Kabuli chana in small quantities but the government?s initiative to stabilise food-grain and pulses market is welcome step,? KC Bhartiya, president, Pulses Importers? Association (PIA) said. With these new developments, will FMCG majors take any price cuts? When contacted, HK Press, President, Godrej Consumer Products said, ?This move will not have any impact on our business.?