Rollback on edible oil base price roils market

The Centre's decision of rolling back the (upward) revised base import prices of edible oils within hours of its revision has left the domestic edible market utterly disappointed and confused.

The tariffs, raised by around 10 per cent earlier in the day, were brought back to the previous levels, except for crude soybean oil, late on Monday.

Although the exact losses are yet to be known, traders have expressed sharp reservation against the move.

"It is the first time that the tariffs have been rolled back within hours of the revision, causing huge losses to importers and exporters," said B V Mehta, executive director, Solvent Extractors' Association of India.

"This (rollback of prices) has sent a wrong message to the domestic as well as the international market," he said, adding because of the revision the market had moved up at a point of time, and came down at another.

Market sources said the rollback clearly reflected the miscommunication that exists across the government departments.

Immediately after the revision analysts had said putting the rates at higher levels would mean an upward valuation adjustment for crude palm oil, RBD (refined, bleached and deodorised) palm oil and crude soybean oil.

However, post-rollback, they said these adjustments would cease to exist, and there could rather be a fall in the domestic prices of palm oil.

Mehta said, "There will be a downward movement in palm oil prices in the range of Rs 10 per 10 kg (in the local market)."

At present, the domestic annual demand for edible oil is 12 million tonne, of which 42 per cent is met through imports.

Incidentally, the imports of edible oils in the first three quarters of the oil year (November-October) declined 15 per cent.