Global edible oil prices moderate, but higher than last year

Global edible oil prices moderate, but higher than last year

25 May    Finance News

Global prices of soyabean, sunflower oil and palm oil have moderated by around 2% to 4% since Indonesia lifted the ban on palm oil exports last week.

According to the food ministry data, current prices of three varieties of edible oil — which constitute about 96% of India’s edible oil imports — are ruling around 31% to 36% more than the prices prevailed a year ago.

Global crude palm oil, which accounts for about 61% of the country’s edible oil import, declined around 4% to $1,700 a tonne on Wednesday from $1,770 a tonne a week ago. Indonesia, the biggest global exporter of palm oil, lifted the export ban on May 19. However, the current price of palm oil is around 36% more than $1,250 a tonne prevailed a year back.

The prices of soyabean oil also witnessed a fall of 4% to $1,755 a tonne in a week, while prices are 32% more than $1,330 a tonne prevailed a year back.

Similarly, in the case of sunflower, there was a marginal moderation in the prices in a week at $2,020 a tonne. The current prices are 33% more than the $1,520 a tonne reported a year back.

India imports about 55% of its annual edible oil consumption. The annual imports of edible oil are around 13 million tonne (MT) — mostly palm oil (8 MT), soyabean (2.7 MT) and sunflower (2 MT). While palm oil is imported from mostly Malaysia and Indonesia, soyabean and sunflower oils are imported mostly from Argentina and Ukraine.

In a bid to curb price rise, the government on Tuesday allowed tariff-free imports of crude soyabean and sunflower oils during this and the next financial year. The tax waiver will be subject to an annual cap of 2 MT for each oil, which will more than sufficient to meet the needs of domestic refiners and ease supplies in the domestic market.

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Import duties on crude palm oil are removed till September 30.

Food secretary Sudhanshu Pandey said the decision to fix the quantum of duty-free import of sunflower and soyabean oil would allow exporting countries to plan their crop and shipments.

Earlier this month, while stating that India has an optimum stock of edible oil, the government had said that around 2.1 MT was the current stock while 1.2 MT of edible were in transit. “The country has sufficient money to cover the lean period due to the ban on export by Indonesia,” it stated.

Indonesia had imposed a ban on palm oil exports on April 28, which was lifted after three weeks.

Domestic edible oil prices have increased by around 30% in a year, taking a cue from the global elevated prices due to a shortfall in production. The rise in the edible oil prices has, in recent months, been a significant driver of retail food inflation, which stood at 8.38% in April, higher than headline inflation of 7.79%.

“Government has taken this decision to provide some relief to consumers in this volatile market and to check the inflation,” Atul Chaturvedi, president of Solvent Extractors Association of India, said.

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