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 Mahamad Rodzi Abdul Ghani
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 Indian edible oil market awaits direction

MUMBAI, Sept. 23 (Business Line) - FOLLOWING imposition of tariff valuesand advent of domestic oilseed harvest season, there has been asignificant slowdown in Indian purchases of various palm oils. After ashort- lived rally in July, the overseas market is forced to seek lowerlevels over the last four weeks as Indian demand declined.If any proof of import slowdown was required, it is here. In the first 20days of the current month, a mere 25,000 tonnes were shipped out fromMalaysia to India, according to shipment data compiled by internationalsurveyors SGS (Malaysia) Sdn Bhd. This comprised about 13,400 tonnes ofrefined palm oil, 5,200 tonnes of refined palmolein and 6,500 tonnes ofcrude palm oil.During August, a record volume of 6.5 lakh tonnes arrived in the countryand in July 5.2 lakh tonnes. For the current month, arrivals are projectedat about 3.5 lakh tonnes, mainly soft oils (degummed soyabean oil) andcrude palm oil. October imports may be even lower. Aggregate importsduring oil year November 2000-October 2001 will be about 48 lakh tonnes,slightly up from 45 lakh tonnes of last year.Will tariff values be revised down? With the slide in palm oil prices inMalaysia, there is renewed expectation of a downward revision in tariffvalues for palm oils here. Large arrivals in July and August kept thedomestic market well fed until recently; but pipeline stocks have startedto dry up as further imports are dwindling.This can lead to a sudden price spurt, especially at the time of impendingfestivals. A weakening rupee too is bullish for the edible oil market.Poor import commitment for September and October because of acutedisparity between local and international prices may lead to tightening ofsupplies and price spikes here. At the current overseas market prices (butassessed at much higher tariff value), palm oil imports have become anunviable business.Also, the upcoming US military action has the potential to disruptinternational cargo movement for several days. In anticipation of priceincrease, some importers and stockists have reportedly gone slow on theirsales programme.However, the policy makers will ride on the horns of a dilemma. Reductionin tariff values will push overseas prices up, result in revenue reductionand depress domestic oilseeds and oils prices. With the kharif oilseedharvest ready to commence, any tinkering with the customs duty or tariffvalues will have to be a carefully calibrated exercise.New crop oilseed prices are likely to come under pressure, notwithstandingthe sharp increase in minimum support price announced recently. NationalAgricultural Cooperative Marketing Federation of India (NAFED) has alreadyindicated its intention to step in to support prices by procuring aboutfive lakh tonnes.

Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
Tel : 603 - 7802 2800 || Fax : 603 - 7803 3533