Edible oil prices seen stable in short term

Edible oil prices seen stable in short term

To curb rising edible oil imports, which are threatening to put pressure on the current account, the government should aim at increasing domestic edible oil production for meeting around 0.7 million tonne (MT) of incremental increase in demand annually, Atul Chaturvedi, President, Solvent Extractors’ Association of India (SEA) said on Thursday.

“Our focus should be to meet the annual rise in consumption of edible oil so that our imports are capped at around 13 MT and subsequently we reduce our imports gradually through increasing domestic production,” Chaturvedi told FE on the sidelines of Globoil India 2022 being held here.

On the future prospects of global edible oil supplies, he said prices are likely to be stable in next 4-6 months, adding that sunflower oil import from Ukraine using ports, which were disrupted earlier, have commenced to India which would ease supplies further.

As India imports 56% of its edible oil requirements, Russia-Ukraine conflict and Indonesia, the biggest exporter of palm oil, imposing a ban on exports in May (which was lifted after three weeks), have impacted global edible oil prices.

Out of the total annual edible oil import of 13-14 MT, the country imports around 8 MT of palm oil from Indonesia and Malaysia. The domestic production of palm oil is around 0.5 MT.

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While other oils, such as soya and sunflower, come from Argentina, Brazil, Ukraine and Russia.

According to Chaturvedi, while palm oil prices have moderated since June, import price difference between palm oil and soyabean oil has been around $350 a tonne which is not sustainable in the long run. A week back, the landed cost at Mumbai of crude palm oil was $950/tonne against $1,335/tonne for soyabean oil and $1,320/tonne for sunflower oil.

To curb rising inflation, the government on May 24 allowed tariff-free imports of crude soyabean and sunflower oils during this financial year and the next.

The tax waiver is subject to an annual cap of 2 MT for each oil, which will more than suffice to meet the needs of domestic refiners and ease supplies in the domestic market. The government also removed a residual 5% agriculture infrastructure development cess on the two crude edible oils.

Meanwhile, the government is aiming at reducing imports by 25-30% through production of 2.8 MT of palm oil by 2030 under the national edible oil mission – Oil Palm.

Currently, around 0.35 million hectare (MH) is under palm plantation and under the national mission on edible oils, Oil Palm, launched last year, an additional area of 0.65 MH is being brought into palm plantation by 2025-26.

“Through bringing in more area under palm plantation in the next three years, especially in Andhra Pradesh, Telangana, Assam, Tripura and Mizoram, we plan to reduce our palm oil import dependence by 2030,” an official, who is involved in the national oil palm mission, said.

Godrej Agrovet, Patanjali Foods and 3F Oil Palm Agrotech Industries account for a major chunk of the country’s oil palm plantations.

Mustard, soyabean and groundnut are key edible oil produced in the country.