January 21, 2008

 

India edible oil shoots up on rises in soy markets

 

 

Indian edible oil prices were up in the week to Friday due to a sharp rise in global palm oil and soy oil markets, traders said.

 

Expectations of a fall in local rapeseed production due to smaller planting areas also kept sentiment firm, they added.

 

Some traders said edible oil prices might rise further after the federal farm minister said Friday the government does not have immediate plans to cut import duties on edible oils.

 

A Mumbai-based edible oil analyst said that for the last several weeks, India's edible oil markets were abuzz with rumors that the government might slash edible oil import duties to check price rises, but today's comments by the farm minister will momentarily put a lid on such rumors.

 

India's edible oil prices are directly affected by global markets as the country imports more than half of its annual edible oil demand of about 12 million tonnes.

 

The country imports palm oil from Malaysia and Indonesia and soy oil from Brazil and Argentina.

 

India last cut import duties on crude palm oil to 45 percent from 50 percent, and soy oil to 40 percent from 45 percent.

 

Rajini Panicker, head research of MF Global in India said that edible oil prices have surged sharply in the last few weeks because of a spike in palm oil, which has also pushed up local markets.

 

According to the latest government data, rapeseed has been sown in around 5.8 million hectares, down from 6.64 million a year earlier.

 

Last year, India produced around 5.7 million tonnes of rapeseed, but this year most traders expect rapeseed production to fall to 5.2 million tonnes.