Increased import duty breathes life into dull soy trade

Soybean and soy product traders and industry players feel that the increase in import duty on vegetable oils has breathed some life in the dull soy trade this year.

On Thursday, the government raised the import duty on crude vegetable oils and refined oils by 5 percentage points bringing the total duty on crude oils to 7.5 per cent and refined oils to 15 per cent.

Indian vegetable oil imports showed substantial increase in the last few years due to low duty regime which hit the profits of Indian farmers, said market players. India is one of the leading vegetable oil consumers and importers and mainly imports from Malaysian and Indonesia.

Both soybean and soy oil prices have started showing improvement after the announcement, said traders.

"Soy oil prices showed around ' 30-40 per 10 kg improvement after the announcement and we feel the gains will continue," said a soy oil broker in Indore.

Currently, soy oil prices in Indore for refined category are ' 640-645 per 10 kg and solvent prices are in ' 620-625 per 10 kg range.

Soybean, the basic raw material for soy oil, has also shown improvement of around ' 100 per 100 kg in the physical markets after the duty announcement, said traders. Currently, soybean auction prices in Indore markets were ' 3100-3300 per 100 kg and higher prices being ' 3500 per 100 kg.

"Prices have been range bound since the beginning of the season and now we feel there will be further improvement as the supplies are also down," said B L Saini, a soybean trader in Indore market.

Industry bodies like Solvent Extractors Association of India (SEA) and Indore-based Soybean Processors Association of India (SOPA) have also welcomed the decision of the government.

SOPA expressed its satisfaction that the government has at least partially increased the customs duty to check the increasing imports of edible oils.

"Although, the duty requested by us was 17.5 per cent on crude and 25 per cent on refined edible oils but we hope that even this small increase will help the local soybean processors and exporters and the government will revisit the import duty in the near future," said Davish Jain, chairman, SOPA via mail.

SOPA has also requested the government to create an Oilseed Development Fund for increasing oilseed productivity and for augmenting availability of oilseeds and edible oils.