Landed prices of imported edible oils move up despite halving of duty

While exporters have raised prices to nullify duty cuts, concerns over the Israel-Iran conflict, and the expected global diversion of additional vegetable oil for biofuel blending schemes are factors

The landed price of major edible oils has risen by 3-5 per cent during the week ended June 20 as compared to the previous week that ended in June 13, data from industry bodies show.

 

The upward movement is despite India lowering import duties on crude oils by 10 percentage points, a 50 percent  reduction, last month to ease inflationary pressures and to ensure steady supplies.

 

In fact, consumer price index-based inflation (combined) for most edible oils has remained stubbornly high since January 2025 despite overall food inflation coming down, prompting the Department of Food and Public Distribution (DFPD) to earlier this month issue an advisory to leading edible oil associations and industry stakeholders to pass on the benefits of the reduced duty to consumers.

 

CPI-based inflation in coconut oil has jumped from 54.20 per cent in January 2025 to 78.04 per cent in May 2025, despite the fact that coconut oil has limited consumption; in fact, the price rise is mainly due to sharp spikes in copra rates whose production has fallen.

 

This, some industry reports say, has shifted demand from coconut oil towards palm oil and soybean oil, further adding to the bullish trend. 

 

Few slippages on edible oil prices

 

Overall, the imported edible oil ecosystem has been on a high for a variety of reasons, starting with low production in coconut, falling demand for soymeal due to rising dried distillers grains with solubles (DDGS) production, and exporters raising prices to offset the impact of India’s duty reduction.

 

Some traders said that as soon as India lowered the import duty on edible oils, exporters in Malaysia and Indonesia raised their rates which nullified the impact of duty cuts.

 

Prices also increased as global crude oil prices rose due to Iran-Israel tensions shortly after the duty cuts.

 

“The escalating conflict between Iran and Israel has sent ripples through global markets, fuelling fears of a broader regional war in the Middle East — a region pivotal to global energy supplies. The continuation of this conflict threatens to disrupt energy-intensive industries and further strain global supply chains, already weakened by post-pandemic aftershocks and ongoing geopolitical uncertainties,” the Solvent Extractors Association of India said in a letter to its members last week.

 

Among the commodities impacted, edible oil prices have surged by $40–50 in just one week, it noted. 

 

Domestic markets not isolated

 

“The domestic market, which had begun correcting downward, thanks to the duty reduction, has once again been influenced by global trends and moved upward accordingly,” the SEA said.

 

It said this underscores how, despite domestic policy measures like duty reductions, external geopolitical developments introduce significant volatility and disrupt price stability and supply chain efficiency in the edible oil sector.

 

The SEA letter also pointed to heavy congestion in India ports that is hampering smooth unloading of vessels carrying imported edible oils.

 

Amit Vatsyayan, leader (government and public sector - agriculture, livelihood, social and skills) at EY India, said that prices surged after import duty hikes in September 2024, saw a brief relief with a duty cut on May 30, 2025, but rose again due to the Israel-Iran conflict and US biofuel policy changes that pushed up crude oil prices, all of which highlight the link between energy and agri-commodity markets.

 

"With substantial crude oil imports, rising global prices strain India’s economy, widening the current account deficit, weakening the rupee, and fuelling inflation," Vatsyayan said, adding that "These recurring shocks underscore the urgent need to boost domestic oilseed and oil palm production, diversify import sources, and stabilize trade policies. Reducing dependency on volatile global markets is essential for protecting consumers and ensuring long-term economic resilience."

 

He said to reduce rising dependence on imported edible oils, India must adopt a comprehensive long-term strategy that includes diversification of both crude and edible oil sourcing across multiple countries to mitigate geopolitical risks.

 

Additionally, introducing a dynamic import duty structure that adjusts in line with international price movements can help balance domestic prices and shield consumers from sudden global shocks, Vatsyayan added.

 

Dr RG Agarwal, chairman emeritus of Dhanuka Agritech Ltd, said that edible oil prices in India are witnessing a sharp rise due to global supply disruptions, adverse weather in major producing nations like Brazil and Argentina, and geopolitical tensions impacting trade flows.

 

An increase in Malaysian palm oil futures, which corresponds with rising US soy oil prices, concerns over the Israel-Iran conflict, and the expected global diversion of additional vegetable oil for biofuel blending schemes are major factors driving this trend.

 

He said although the Indian government recently reduced the basic import duty on key crude edible oils from 20 per cent to 10 percent to control inflation, global price hikes have offset the relief.

 

"Retail prices are yet to reflect the duty cut, as existing high-cost inventories remain in circulation. This dependency on imports, over 60 per cent of our edible oil needs, exposes India to global volatility," he said.

 

The long-term solution to this recurring problem, according to Agarwal, lies in reducing dependence through enhanced domestic oilseed production.

 

“This can be achieved by encouraging farmers through assured procurement, fair MSPs, and better market linkages, alongside providing access to high-yielding seeds, climate-resilient practices, and integrated crop protection,” Dhanuka added.

 

Another reason for high edible oil prices

 

A section of the industry feels that more than low import duty edible oil, retail prices are high due to the near collapse of the domestic soymeal market.

 

Soymeal is the residue that is left after extraction of edible oils from soybeans and is a rich source of protein used extensively as a major ingredient in manufacturing of livestock feed. Soybean oil is a major source of domestic edible oil.

 

Soymeal prices have largely remained flat at around Rs 27,000-Rs 31,000 per tonne so far in the 2024-25 oil marketing year (November to October) because of a substantial demand dip.

 

When soybeans are crushed it generates around 18 per cent edible oils while the balance is oil meals.

 

In the 2024-25 oil year, actual soymeal consumption has been around only 6.6 million tonnes against estimates of a demand of 7.3-7.4 MT, a drop of 700,000-800,000 tonnes. This decline is largely because it has been replaced by DDGS, a cheaper alternative.

 

DDGS is a nutrient-rich by-product of ethanol production, primarily from maize, that is used as a feed ingredient for livestock. It's a valuable source of protein, fiber, and other essential nutrients, making it a popular alternative to traditional feed like soybean meal.

 

As ethanol produced from maize rises exponentially across the country to meet the Centre’s petrol blending target of 20 per cent by 2025, DDGS output has grown correspondingly. In the 2024-25 ethanol supply year (November '24 to October '25), around 6.50 billion litres of ethanol will be produced from grains, of which maize is a major component while that from sugarcane will be just around 2.50 billion litres.

 

“Traditionally, when oil meal rates are higher, edible oil prices fall and vice versa happens when oil meal rates. Now, since almost a year, oil meal rates have not risen as there is no demand due to the massive influx of DDGS in such a situation. How can edible oil rates come down?” questioned an industry official.

 

As a result, he said, oilseed farmers are getting unnecessarily squeezed which could reflect in their sowing decision in future.