18/03/2008 (Bloomberg) - India, the world's second-biggest buyer of vegetable oils, banned exports of all edible oils to boost local supplies amid concern a smaller winter oilseed crop may worsen a shortage.
The one-year restriction is effective from yesterday, the directorate general of foreign trade said on its Web site today. Edible oil shipments from the South Asian nation comprise mostly groundnut oil and coconut oil to the U.S., Europe and China.
India cut the levy on vegetable oil imports four times last year to the lowest since at least 2000, joining China, Malaysia and Thailand in securing food supplies. Prime Minister Manmohan Singh's government has curbed exports of rice and wheat, capped retail fuel prices and banned some commodities trading to curb inflation before general elections in May 2009.
``Ban on exports is another step to ensure that local prices of edible oils don't flare up,'' B.V. Mehta, executive director at the Solvent Extractors' Association, said in a phone interview in Mumbai. ``Government could take more steps such as reducing import duties or banning futures trade in oilseeds.''
Finance Minister Palaniappan Chidambaram yesterday said the government would take steps to curb food prices that have driven up inflation to a nine-month high.
The South Asian nation relies on imports to meet half its edible oil needs. It buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil. Palm oil and soybean oil prices reached record this month on demand for food and fuels.
The country exported 30,000 tons of groundnut oil in the November-February period, according to the Solvent Extractors' Association. It didn't export the commodity last year.
Soybeans, soybean oil and mustard oilseed prices fell on the National Commodity & Derivatives Exchange in Mumbai today. Prices of soybean oil for April delivery declined as much as 3.9 percent, while mustard oilseed for May delivery dropped 4 percent.
``The market is clearly in a panic mode. Nobody is sure about what step the government could take next,'' Mehta said.
India's edible oil imports tripled to 430,992 metric tons in February from a year ago amid expectation of a surge in domestic demand as winter oilseed crop is forecast to drop on bad weather.
Winter-sown oilseeds harvest may decline to 8.6 million tons from 9.52 million tons a year earlier, Mehta said March 3. Output of mustard seeds, the nation's biggest winter-sown oilseed crop, may fall 15 percent to 5.09 million tons this year, he said.