Edible oil prices will soften by Rs 15/litre in a few weeks: Industry

Decision arrived at today during a meeting between industry players & officials

The edible oil industry has assured the government of further reduction in retail prices by at least Rs 10-15 a litre in the next few weeks, trade sources said.

The assurance was given during a meeting that the industry had with senior officials from the food ministry on various issues concerning the edible oil industry.

PTI reported that food secretary Sudhanshu Pandey — while directing the industry to lower prices — also asked the players to maintain a uniform maximum retail price (MRP) of the same brands of cooking oils across the country. Currently, there is a difference of Rs 3-5 per litre in different zones.

“We have already lowered the retail prices by Rs 10-20 per litre, depending upon the brands. We would lower them by another Rs 10-15 per litre but it can’t happen overnight as cargoes are booked in advance and price transfer takes time,” B V Mehta, executive director of Solvent Extractors Association of India (SEA), told Business Standard.

Mehta said other pressing issues — including storage control order on edible oil at the retail level — is disrupting the supply chain. The issue related to tariff rate quota (TRQ) was also discussed.

“According to the stock holding limit order, retail traders are not allowed to store more than three tonnes of edible oil at a given point of time. This has disrupted the supply chain and big retail outlets don’t want to buy in bulk. We told the government to abolish this,” he said.

Meanwhile, Atul Chaturvedi, chairman of SEA, said the government wants the edible oil industry to quickly pass on the benefits of softening global prices to consumers.

He added, “We, too, are willing to do so as our cost also comes down with this, but it will happen in due course of time.”

Prices of major edible oils have slumped in the global markets since June. This has also pulled down the domestic market as India imports almost 60 per cent of the consumed amount. It is largely from Indonesia and Malaysia for palm oil and Argentina and Brazil for soybean oil.

Data shows that between June 1 and July 1, the landed price of crude palm oil (which is the largest consumed edible oil in India) has dropped by almost 24 per cent. Also, soybean and sunflower oil dropped by 17.4 and 12.2 per cent, respectively.

Globally, palm oil, the world’s most consumed edible oil, has plunged more than 45 per cent from its record close in April to the weakest level in a year.

Going forward, too, there is hope that edible oil will remain subdued due to a drop in global demand. This would also be because of good sowing of the domestic kharif oilseed crop, namely soybean and groundnut.

A few days ago, soybean prices in Indore (the benchmark market) recovered from a four-month low to trade around Rs 6,500 per quintal.

But trade sources said that the relief could be short lived. This is because of scrapping the import duty on crude soybean oil and sunflower oil as well as expectations of higher CPO and Palm Olein supply from Indonesia and Malaysia, among others.