Edible oil prices to decline further, says food ministry

Edible oil prices are likely to soften further in the coming months, due to a decline in global prices and robust domestic crop prospects, a food ministry official said on Wednesday.

According to official data, landed prices of palm oil declined 37% to $910/tonne on Tuesday, from the levels prevailing a year back. However, the landed cost of crude soybean and sunflower oils declined marginally by 5% to $1,310/tonne and $1330/tonne, respectively, during the same period.

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“We will see softening prices of edible oil in the next one month or so,” the official said at a briefing. India meets 58% of its annual edible oil consumption of around 24-25 million tonne (mt) via imports and annual imports are around 14 mt. Around 8 mt of palm oil is imported from Indonesia and Malaysia, while other oils, such as soya and sunflower, come from Argentina, Brazil, Ukraine and Russia.

Also read| India’s edible oil import bill up 34 pc at Rs 1.57 lakh cr: SEA

The government has removed the import duty on crude palm oil, soybean and sunflower oils. However, after taking into account 5% agri-cess and 10% social welfare cess, the effective duty on three crude varieties is 5.5%. The modal retail prices of mustard oil, which has a share of more than 40% in domestic edible oil production, declined by 9% to Rs 170/litre on Tuesday compared to the year-ago period. However, retail prices of groundnut and soybean oils have witnessed an increase of around 9% and 2.5%, respectively, to Rs 191/litre and Rs 155/litre. Meanwhile, rabi or winter crops area under oilseeds such as mustard and groundnut has been reported at 13% more than the previous year, at 5.9 million hectares, so far.

The “edible oils and fats” category saw a negative inflation at 2.15% in October, mostly contributed by decline in domestic prices of edible oil since May. For mustard oil, prices declined 9.95% in October. Inflation in refined oil (sunflower, soybean and palm) was a marginal 0.74% because of a decline in global prices of edible oil.