The Hindu Business Line : ‘Vegoils import surging on lack of stocks’

Usually, there will be 6-7 lakh tonnes of imported vegetable oils in the ports and an equal quantity with the refining units. But currently, the stocks seem to be much less, trading sources said.

Surprising factor

However, Mr Ashok Sethia, President of the Solvent Extractors Association, said: “It is surprising that import is rising every month in spite of substantial stock at the ports and in pipe lines, even ignoring the price rise in the last three months in the international market. It seems the domestic oil availability has been reduced due to lower kharif oilseed crops and drop in cottonseed oil production. Milling of rice has been affected due to ban on export of rice, which has reduced the availability of rice bran and thereby, its oil.”

During the first five months of the oil year, imports have increased 59 per cent to 35.93 lakh tonnes (lt). A record 63 lt of vegetable oils were imported last season.

“Looking at the current trend, I expect about 6-7 lakh tonnes shipment in April as well as May and wont’ be surprised to see a record import of around 75 lakh tonnes during the current oil year,” Mr Sethia said in a letter to the industry.

When contacted, Mr B.V. Mehta, Executive Director, Solvent Extractors Association, said crude palm oil imports into the country could top 50 lakh tonnes this year. “RBD palmolien imports could be around eight lakh tonnes, sunflower oil 7.0 lakh tonnes and soyabean oil some 10 lakh tonnes,” he said.

US soya oil

A significant development in the import scenario is that importers have contracted at least one lt of soyabean oil from the US.

“Unrest in Argentina, where crushing has been affected, besides projections of a lower production there have resulted in traders signing contracts to buy US soya oil,” he said.

Besides the lower projection of soyabean crop in Argentina (down to 36 million tonnes from 48 million tonnes), fall in Malaysian palm oil stocks have also led to rise in edible oil prices across the globe.

Despite the higher imports, the Centre is seen balancing the interests of farmers and consumers.

“We don’t see the Centre imposing customs duty on vegetable oil imports as long as oilseed prices are above the minimum support level. We need to worry only if the prices fall below the support level,” said Mr Sanjay Agarwal, Managing Director, K S Oils Ltd that sells mustard oil in the domestic market while also importing palm oil.

Currently, mustard/rapeseed and soyabean prices are ruling at Rs 2,400-2,500 a quintal, said Mr Sethia. The support price for mustard/rapeseed has been fixed at Rs 1,830 a quintal, while for soyabean it is Rs 1,390.

Higher output forecast

The Central Organisation of Oil Industry and Trade has estimated this season’s oilseed output marginally higher at 246.5 lt against 245.9 lt last season. Kharif oilseeds production has been put at 150.7 lt against 164.9 lt, and the shortfall has been projected to have been made up in rabi with output being estimated at 95.8 lt against 81 lt.

Production of mustard/rapeseed, the major rabi oilseed, has been estimated at 65 lt against 45.9 lt year ago.

“Imports also are rising since consumption is rising. Palm oil prices are below Rs 50 a kg and that has led to increased offtake,” Mr Agarwal said.