07/08/2008 (Commodity Online), New Delhi - News of an increased domestic oilseed output and crashing global prices may force the centre to impose import tax on crude vegetable oils, which was lifted following a huge rise in prices in the domestic market.

However, the commodity’s prices have come down in the global market and the traders expect the rates to go down further. This has forced several traders to renege on contracts to import palm oil.

Malaysian prices for palm oil crashed to a nine-month low this week.

According to Solvent Extractors’ Association office-bearers, Malaysian traders are complaining that some Indian traders are backing out of deals and have stopped issuing letters of credit.

India is the world’s biggest vegetable oil importer after China. In April, India allowed duty-free imports of crude vegetable oils and cut the levy on refined oils to 7.5 per cent.

In March, the government had banned exports of all vegetable oils for a year despite tiny overseas sales.

India imports almost half of its annual consumption of about 11 million tonnes of vegetable oils. It buys palm oil from Malaysia and Indonesia and soyoil from Brazil and Argentina.

Meanwhile, oilseed futures opened lower on Thursday tracking weak Malaysian palm, and on profit-taking after the previous session’s sharp rise.

Palm oil October contract on the Bursa Malaysia Derivatives Exchange was down 1.11 per cent at 2,759 ringgit a tonne in the morning trade.

Soybean September contract was 0.72 per cent lower at Rs 2,428 per 100 kg.
Rapeseed November contract on NCDEX was also down 0.32 per cent at Rs 593.65.