In spite of reduction in customs duty on imported palm oil, prices of edible oils have gone up by almost 8% across the country during the last fortnight. Retail prices of cooking oils have gone up by Rs 10-15 per kg in this period.
According to traders, there seems to be an increased demand for refined palm oil after the easing of restrictions. Demand of palm oil in India from Nepal and Bangladesh is also increasing as the import duty from these two countries is nil.
This rally is despite the 10% export tax reduction by Indonesia and 5% duty reduction by India. Post the second Covid wave, edible oil demand all across Asia seems to have increased. Experts are attributing this demand to a depleted pipeline that needs to be filled and dry weather in Canola region of Canada among other global factors.
Globally, there have been concerns due to the hot and dry weather conditions in Canada, Brazil, Argentina and the US. Canada is witnessing temperatures between 45 and 48 degrees and there are reports of destruction of the Canola crop. Brazil, Argentina and the US are also experiencing dry weather which has affected the soybean crop.
The increasing number of Covid cases in Malaysia and Indonesia has also led to concerns regarding palm production being affected by paucity of labour. This has resulted in international prices going up by nearly $100 a tonne in the last two weeks.
International palm oil prices have gone up from $1,030 a tonne to $1,150 a tonne, soy oil prices from $1,220 a tonne to $1,325 a tonne and sunflower oil prices from $1,200 a tonne to $1,330 a tonne.
In India, the government announced a reduction by Rs 20 per kg in edible oil prices. Since India imports edible oil to the tune of 65-70%, the international factors have affected domestic prices. The rupee depreciation has further made imports costlier.
Deficient rain in the oilseed growing central India has affected planting activity of soyabean crop in Madhya Pradesh and central India. Crude soybean oil also has become costlier by about 10% in the past fortnight.