The Hindu Business Line : Edible oil prices softening; imports may gather momentum

VEGETABLE oil import volume in July dipped from the previous month. The preliminary estimate of arrivals last month is 2.45 lakh tonnes (lt) according to data made available to Business Line by Oilmandi.com, an industry portal.

Imports comprised in the main 1.34 lt of crude palm oil; 23,600 tonnes of crude palmolein; 20,700 tonnes of refined palmolein; and 62,000 tonnes of degummed soyabean oil, the rest accounted for by crude palm kernel oil.

With this, imports in the first nine months of oil year 2003-04 (November-October) aggregated 26.5 lt. A substantial decline from the 38.6 lt imported during the same period previous year 2002-03 is the result of a near-record crop of oilseeds 250 lt harvested by the country in 2003-04.

Over the next three months (August-October), consumption demand for cooking oils is expected to rise manifold because of the series of festivals during the period.

Import requirement for August-October is estimated at 14-15 lt. That would take the projected annual import (oil year) to 41-42 lt versus 51.1 lt in 2002-03. Current oil inventory here is estimated at about four lakh tonnes.

International vegoil prices are weak following rising inventory of palm oil in Malaysia and excellent soyabean crop prospects reported in the US.

With supply position comfortable, the market is expected to continue to be soft and may even tend lower, according to experts.

However, August and September months are crucial for the crops. It was in August last year that soyabean crop in the US was reportedly damaged because of aberrant weather, but the market took cognisance of it much later, in October when the US Department of Agriculture released its report. In 2002 also, something similar was experienced.

Although recent rains across central and western parts of the country have brought tremendous relief to farmers, kharif 2004 oilseed crop prospects are far from satisfactory.

Complete absence of precipitation till almost the end of July has already caused some irreparable damage to crop in areas planted by end-May/early-June.

The current wet spell may help some replanting, but nothing more as far as kharif oilseeds are concerned. It is likely the size of crop to be harvested in October could shrink by as much as 20-25 lt from last kharif, with both groundnut and soyabean taking a big hit.

For the next oil year beginning November 2004, India's imports volumes could rise substantially, possibly to the level of 2002-03.

Meanwhile, the trade is waiting for revision of tariff values on vegetable oils, an exercise that is overdue by several weeks. The non-transparent nature of decision-making on tariff values is a cause for concern for the vegetable oil market. Speculators are having a field day.

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