Edible oil prices seen to stay elevated
Edible oil prices in India are expected to stay elevated due to rising global rates and increased import duties on crude palm, soybean, and sunflower oils, which have surged by 10.6%, 16.8%, and 12.3%, respectively. With around 58% of consumption imported, retail prices have increased, and no immediate relief is anticipated for consumers in the coming months.
Edible oil prices are likely to stay elevated in the coming months with a spike in global prices of cooking oils and the increase in import duties by the government last month, food ministry sources said
Sources told FE that since the government increased import duties on crude palm, soybean, and sunflower by 27.5% last month, the global prices of three oils – palm, soybean and sunflower– which constitute major chunk of country edible oil import basket, have risen by 10.6%, 16.8%, and 12.3% respectively in last one month.
“As we import around 58% of our edible oil consumption, the retail prices have risen correspondingly and there is unlikely to be any relief soon,” sources said.
According to Solvent Extractors Association of India (SEA), land prices crude palm, soybean and sunflower on Thursday was $1145/tonne, $1160/tonne and $1165/tonne respectively which is an increase of 32%, 18% and 26% respectively compared to previous year.
Meanwhile, deflation in edible oils which had continued for one year till August, 2024 turned the corner with inflation of 2.47% in cooking oil prices in September due to a hike in import duties.
According to price monitoring cell of department of consumer affairs, the modal prices of mustard, sunflower and soybean have risen to Rs 181/litre, Rs 148/litre and Rs 143 respectively on Thursday, from Rs 135/litre, Rs 126/litre and Rs 143/litre prevailed in September 16 when hike in import duty was announced.
Last month, duties on crude palm, soyabean and sunflower oils was increased to 27.5% from the earlier level of 5.5%. The levy on refined edible oil, also has been raised to 35.75% from 13.75%.
The SEA has projected the total import of edible oil in the current oil year (November 2023-October 2024) in the range of 16-16.5 million tonne (MT). In the 2022-23 oil year, the import of edible oils rose 17% on year to a record 16.47 MT helped by a lower duty of only 5.5% on crude oil imports.
Earlier, the agriculture ministry had suggested that import duty on edible oil should not be less than the cost of cooking oils processed from any domestic variety of edible oil.
India is the world’s second-largest consumer and top vegetable oil importer. In terms of domestic output, the share of oils includes mustard (40%), soybean (24%) and groundnut (7%), among others.
Because of higher imports, the government agencies – Nafed and NCCF plans to purchase around 2.8 MT of soybean at minimum support price (MSP) from farmers from key producing states – Madhya Pradesh, Maharashtra, Karnataka and Telangana — as prices were below MSP.
The government agencies had purchased 1.2 MT of mustard from the farmers in key producing states of Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh last rabi season.
Meanwhile according to a bloomberg report Palm oil advanced for a fourth day to its highest intraday level since July 2022 on a tight supply outlook, raising concerns about food inflation in countries from India to China.
The world’s most-consumed cooking oil, up 12.7% so far in October, is on track for a third month of gains on production worries in top growers – Indonesia, Malaysia and Thailand.
Source Link : https://www.financialexpress.com/policy/economy-edible-oil-prices-seen-to-stay-elevated-3648827/lite/
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