India raises palm oil base prices

India, the world's leading edible oil importer, on Monday raised base import prices of palm oils but cut the base price of crude soyabean oil which traders said would lead to increased soya oil imports.
The country buys nearly half its annual needs of about 11 million tonnes in the form of palm oils from Malaysia and Indonesia and soft oils from Argentina and Brazil.
The government said in a notification on a tax Web site that the base import price of crude palm oil had been raised to $434 a tonne from $426, while that of crude soyabean oil had been cut to $513 a tonne from $518.
India fixes base prices to calculate customs duties to prevent the loss of revenue due to under-invoicing by importers. Traders pay import duties on base values irrespective of the prices paid for the oil.
Traders said while the increase in the base price of crude soyabean oil was in line with existing market prices, the tariff revision on palm oils was on the higher side.
"The changes do not reflect the market price of crude palm oil," said B.V. Mehta, executive director of the Solvent Extractors' Association of India. "This will only encourage crude soyabean oil imports."
Mehta said the market price of crude palm oil was about $402 a tonne cost and freight while the government has fixed the price at $434 a tonne.
"This will facilitate crude soyabean oil imports at a time when farmers are harvesting a soyabean crop."
The government also raised the prices of RBD palm oil to $439 a tonne from $436, other palm oil to $437 from $431, crude palm olein to $443 from $438, RBD palm olein to $449 from $447 and other palm olein to $446 from $443.
The country imports 150,000-200,000 tonnes of crude palm oil every month. India's imports currently comprise 60 percent palm oil and 40 percent soyabean oil.
"The government needs to have a transparent mechanism while revising the base prices and the changes should reflect the prevailing market prices," said Sandeep Bajoria, chairman of the Central Organisation of Oil Industry and Trade.
At 1100 GMT, November soyaoil at the Multi Commodity Exchange was quoted at 357.85 rupees per 10 kg, up 1.35 rupees. The December contract at the National Commodities and Derivatives Exchange was up 2.30 rupees to 362.90 per 10 kg.