Experts slam ban decision

The imposition of ban on edible oils' exports from the country will have no impact on the galloping prices in the domestic market, according to market experts.

The country, which faces a scarcity of edible oils, exports marginal quantities of edible oils and is dependent on exports for meeting more than 40 per cent of requirements.

Domestic prices of edible oil have increased in the range of 10-28 per cent since January, 2008. Soybean Refined oil, which was quoted at Rs 54,000 a tonne as on 2 January, is currently available at Rs 69,000 a tonne, up 27.78 per cent.

Similarly, groundnut oil is up 13.08 per cent, while rapeseed and sunflower oil have soared 10.34per cent and 19.69 per cent, respectively .

Experts termed the government's action as a meaningless step which will have virtually no impact on the prevailing market scenario.

According to B V Mehta, executive director, Solvents Extractors' Association of India (SEAI), the country exports very meagre quantity of edible oils.

"The country exports around 5,000-10,000 tonnes of coconut oil and mustard oil to cater to the Indians residing abroad," he said.

"Banning of exports will just have a temporary effect on market sentiments. Moreover, on Tuesday the decline in rates have rather come from the international cues from Malaysia where edible oil prices weakened," said Mehta.

"This year, so far, the country has exported around 30,000 tonnes of groundnut oil and around 7000-8000 tonnes of exports are pending," said Mehta.

SEAI has been trying to launch exports of rice bran oil, a value added edible oil. But with this ban, the export prospects, at least for a year, have been put on hold.

"It is a short term measure. Sentiments will be down for not more than a fortnight," said Badrudddin Khan, research analyst at Angel Commodities. Experts feel that bullishness in the edible oil market is there to stay as the domestic consumption is outpacing supply.

They advocated for a long-term solution. Oilseed production is stagnant for over a five years time. "The government should take measures to increase the domestic production of edible oil," said Mehta.

On the National Commodity and Derivatives Exchange, the April futures of Refined soy oil closed at Rs 642 per 10 kg against the previous close of Rs 657 per 10 kg.