Chennai: Edible oil refiners cancelled around 1 lakh metric tonnes of palm oil imports after the spurt in Malaysian prices over the increased import duty made shipments non-profitable. Prices of some of the edible oils spurted in the futures market on Monday, raising concerns about elevated prices during the festive season.
Around 10 refiners have cancelled the purchase contracts with overseas sellers after Malaysian palm oil prices jumped 9 per cent in the past four days. BMD crude palm oil prices have gone up from 3700 ringgit per tonne as on September 17 to 4026 ringgit on September 23.
Further, the government on September 13 had increased the duty on crude palm, soyabean and sunflower oil to 20 per cent from 'nil' and that on refined palm, soyabean and sunflower oils to 32.5 per cent from 12.5 per cent.
“The duty hike had already made imports costlier. The recent spurt in prices in Malaysia has forced refiners to go light on shipments,” said Sandeep Bajoria, CEO, Sunvin Group and past president of Solvent Extractors Association of India.
Following the development, edible oil counters in the Indian futures market saw a spurt in prices. On Monday, October contract of sunflower oil went up 2 per cent and cotton wash oil prices went up 4 per cent.
“Soybean oil prices have already moved up 30 per cent in the past one month. Prices, which stood at Rs 935 per 10 kg as on August 19, have moved up to Rs 1225 per 10 kg in the futures market due to duty hike and concerns of weather disturbances hurting the crop,” said Ajay Kedia, MD, Kedia Commodities.
“Development in any edible oil impacts the prices of other edible oils as the market tends to substitute it with other oils. According to the government, the country has enough edible oil stocks for the festive season and the new crop is also expected to be good. However, weather disturbances may affect the harvest and prices,” said Kedia.
According to Bajoria, the government has said that it has 25 lakh tonnes of mustard seed buffer stock. This can produce 10 lakh tonnes of oil. “In the case of shortage, government can make use of the buffer stock. Further, the cancellations will have a bearish effect on overseas palm oil market”.
