G. Chandrashekhar

Mumbai , June 2

FOR the second month in a row, edible oil imports into the country topped five lakh tonnes (lt).

As per the preliminary import data compiled and made available to Business Line by the industry portal Oilmandi.com, the month of May witnessed arrivals of 5.33 lt, up from 5.21 lt in April.

Imports comprised broadly 1.51 lt of crude degummed soyabean oil; 3.14 lt of crude palm oil; 31,600 tonnes of crude palmolein; and 22,700 tonnes of refined palmolein. Some refined soyabean parcels (8,000 tonnes) and crude palm kernel oil (5,000 tonnes) were also received.

With this, vegetable oil imports in the first seven months of the current oil year 2004-05 aggregated to 27.3 lt, as compared with 20.7 lt during the same period previous year. Actually, edible oil imports so far accounted for 27.3 lt compared with 28.1 lt witnessed in the drought year 2002-03.

A trade intermediary commented that the import volumes in the last two months were unusually high and not warranted by domestic market conditions.

Importers have been claiming adverse market conditions and price disparity; but import volumes hardly justify such a complaint.

As a result of large imports and sluggish offtake in the domestic market due to slack summer demand, shore tanks are bursting at their seams. It is estimated that nearly six lakh tonnes of various oils are lying in tanks at various points of entry. Considering that demand for cooking oil rises manifold during the festival months from August to October and that traditionally imports peak during these months, aggregate imports for the oil year ending October 2005 are projected at no less than 50 l.<149>t.

The trade has been speculating over possible reduction in tariff values of imported oils; but the timing seems to be inappropriate as it would further depress the already weak domestic prices and affect the sentiment at the time of planting of kharif season oilseeds.

Weather conditions in the USA<149>, China and India over the next four months would play a crucial role in determining the quantity of oilseeds output for 2005-06, which in turn will have an impact on vegetable oil prices. Robust growth in palm oil production in Malaysia is being keenly watched.

The role of National Agricultural Co-operative Marketing Federation which is holding close to 20 l.<149>t. of rapeseed/mustard purchased at the minimum support price of Rs 17,000 at tonne will be critical for the domestic market. The manner and pace of stock disposal needs to be watched.

Whichever way the stocks are liquidated — whether in domestic or export market — there is strong belief that a huge financial burden will befall the government in the procurement and disposal of rapeseed/mustard this season.

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