Rising palm oil prices are good news for local farmers considering planting palms
Updated – Thu, 12/29/22 at 06:36pm
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Hyderabad: Palm oil prices are strengthening. Until recently, the price was around Rs 100 per litre, now it is Rs 110. Prices are up about 10%, and that trend is likely to continue for a while.
“The prices of edible oils first rose to new highs because of Covid and the Russia-Ukraine dispute. Then they have come down because of government intervention. Now, palm oil prices have risen. around Rs 110 per liter. The price of sunflower remains in the range of Rs 150-160 per liter for consumers,” said P Chandra Shekara Reddy, Senior Vice President (Sales and Marketing), Freedom Healthy Cooking Oils Sales, on industry trends .
According to him, palm oil prices will rise further. Countries that produce palm are in favor of exporting the finished product rather than crude oil. This results in higher prices. On the other hand, rising palm oil prices are good news for local farmers considering palm plantation.
Vegetable oil imports hit a new record 1.54 million tonnes in November, the first month of the 2022-23 oil year, up 11 percent from 1.39 million tonnes in October, according to the Solvent Extractors Association (SEA) of India. In November last year, vegetable oil imports stood at 1.17 million tonnes.
In terms of crude palm oil (CPO), imports in November were 931,000 tons, a record high in a single month. In October, 756,000 tons of crude palm oil were imported. Imports of refined, bleached and deodorized palm oil (RBD) are growing rapidly. About 202,000 tonnes of RBD were imported in November, compared with 127,000 tonnes the previous month.
Soybean crude oil imports fell to 229,000 tonnes last month from 335,000 tonnes the previous month. Sunflower oil imports increased from 144,000 tonnes in October 2022 to 157,000 tonnes in November.
According to Dr. BV Mehta, Executive Director of SEA, the current 7.5% difference in import duties between CPO (5%) and RBD (12.5%) encourages refined palm oil to enter the country.
Palm oil imports rose 168% in the just-concluded oil year (November 21-October 22). Imports of RBD palm olein jumped by more than 200,000 tonnes in November 2021. Such finished product imports have also severely impacted capacity utilization in the palm refining industry, he said.
The increase in palm oil imports is mainly due to incentives for its industry by exporting countries such as Malaysia and Indonesia. They maintain high export duties on crude palm oil and low export duties on palm oil products.
The industry body favors a 15 percent tariff differential between CPO and RBD palm olein. It wants the government to raise the import duty on RBD to 20% from the current 12.5%.
This will reduce imports of refined palm oil, while the same imports will be replaced by imports of crude palm oil. The country’s overall imports will not be affected and there will be no impact on edible oil inflation, he said in a statement.
