15/10/2007 (The Hindu Business Line), Chennai - With the landed price of crude palm oil being cheaper than de-gummed (crude) soyabean oil by at least $130 (Rs 5,000), importers are likely to be encouraged to import more of the former.

“Today, the landed cost of crude palm oil is $1,032 a tonne, while that of de-gummed soyabean oil is $1,162 a tonne. This difference encourages import of more crude palm oil,” said Mr B.V. Mehta, Executive Director, Solvent Extractors Association of India (SEA).

Veg oil imports

The comments are supported by statistics of vegetable oil imports during the current oil year (November 2006-September 2007). According to SEA, crude palm imports in September was 2.46 lakh tonnes (lt), more than half of the total 4.46 lt of edible oils brought into the country. De-gummed soyabean oil made up 1.79 lt.

For the oil year, crude palm oil imports have totalled 26.24 lt against 12.25 lt of degummed soyabean oil. Again, the former’s share is over 50 per cent of total edible oils import of 42.13 lt. Interestingly, crude vegetable oils import has totalled 97-98 per cent of total shipments into the country since 2005-06 oil year.

Bound to rise

According to Mr Mehta, edible oil imports are bound to rise in October also in view of the festival season. “Usually, imports increase during May-November since all the oilseeds produced domestically would have been crushed by April. Nearly 60 per cent of the total vegetable oils import takes place in the second half of the season,” he said.

“Actually, there is a demand squeeze as prices are ruling high. Otherwise, our imports should have been higher,” Mr Mehta said.

Still, edible oil imports at 42.13 lt are 11 per cent higher than the same period a year ago since the domestic oilseeds production was lower. During September, imports were up 23 per cent .

Oilseeds output

“Oilseeds production declined to 239 lt from 279 lt the previous year,” the SEA official said.

In the coming oil year, the oilseeds crop is expected to be around 260-270 lt. “While kharif oilseeds crop in better than last year, rabi crop is expected to be same,” he said. This year, kharif oilseeds crop has been projected at 150 lt.

“Prices could have been more higher but for the Centre cutting Customs duty and the rupee gaining sharply against the dollar. The effective Customs duty on edible oil is only 25 per cent,” Mr Mehta said.

“RBD palmolein now rules at $870 a tonne against $455 the same time last year. Crude palm oil quotes at $820 against $433, degummed soyabean oil at $955 against $595, sunflower at $1,440 against $638,” he said. “ Import of sunflower oil can be totally ruled out,” he said.

Domestic prices

In comparison, the domestic prices of groundnut oil has increased from Rs 55,977 a tonne to Rs 70,000 during the period. Rapeseed oil has gone up to Rs 48,900 against Rs 41,355; sunflower to Rs 55,000 from Rs 46,186; RBD palmolein to Rs 45,600 from Rs 41,632; and soyabean oil is up at Rs 46,900 from Rs 41,500.

“Domestic edible oil prices have increased between 8 and 19 per cent only compared with the over 50 per cent flare-up in global prices,” Mr Mehta said.

“Imports are bound to rise. Next season, overall vegetable oil imports are likely to be 57-58 lt. Demand is increasing by 6-7 lt annually, which is equal to 20 lakh tonnes of oilseeds. We need to increase our production,” he said.