Oilseed prices rise on restocking by crushing mills

Two major kharif season oilseeds have seen a sharp increase in their prices after the government in midNovember raised the import duty on edible oils, to protect farmers.

While soybean has become costlier by 19.4 per cent to ~3,303 a quintal, groundnut is up eight per cent since November, when the government announced a duty hike, to trade currently at ~4,700 a quintal.

Quoting at the time below the Minimum Support Price, both leading oilseeds of the kharif harvesting season have since jumped to trade above this benchmark (~3,050 a quintal for soybean and ~4,500 a quintal for groundnut).

Prices of other oilseeds have also moved up, albeit less. The turnaround has cheered farmers and stockists alike. Oil mills have also started stocking before a further price spike. Both ways, farmers would benefit, presumably encouraging them to bring more area under oilseeds next season.

India’s hike in import duty has led Malaysia to suspend export taxes on crude palm oil for three months effective January 8. India’s vegetable oil import fell 10 per cent in December from the same period last year. November’s import saw a six per cent jump.

To check rising import of refined (RBD) palmolein, encourage the vegetable oil industry and maintain the duty difference between crude and refined palm oil at 15 per cent from the current 10 per cent, the import duty on the refined variety should be 45 per cent, from the present 40 per cent, says B V Mehta, executive director, Solvent Extractors Association. This will go a long way in improving capacity utilisation of the refining industry, he added.

Ajitesh Mullick, analyst with Religare Securities, believes the market undertone remains positive for soybean.

“In the coming weeks, the pace of arrivals will be declining. Therefore, wholesalers will be showing interest in stocking from physical markets at every moderate price fall. Dry weather in Argentina will be another factor supporting the upward trend,” he said.