India, the world's largest edible oil importer, on Monday reduced base import prices of palm and soyabean oils. But traders said the reduction in base import prices was below market expectations.
Of the approximately 11 million tonnes of edible oils India consumes a year, it buys nearly half in the form of palm oils from Malaysia and Indonesia and soft oils from Argentina and Brazil.
A finance ministry official said the base import price of crude palm oil had been cut to $417 a tonne from $433, while that of crude soyabean oil had been reduced to $497 a tonne from $510.
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.
The government also reduced the prices of RBD (refined, bleached and deodorised) palm oil to $432 a tonne from $435, other palm oil to $425 from $434, crude palmolein to $418 from $440, RBD palmolein to $421 from $445 and other palmolein to $420 from $443.
"The base prices are still higher than the average price of soyabean and palm oils in the last one week," said B.V. Mehta, executive director of the Solvent Extractors' Association of India.
Traders said the average price of crude palm oil during that period was around $385 a tonne and that of crude soyabean oil was $475 a tonne.
Palm oil accounts for 60 percent of the country's total edible oil imports while soyabean oil makes for the rest. India imports 150,000-200,000 tonnes of crude palm oil every month.
At 1333 GMT, January soyaoil at the Multi Commodity Exchange was quoted at 338.10 rupees per 10 kg, down 1.45 rupees. The January contract at the National Commodities and Derivatives Exchange was down 1.75 rupees to 338.85 per 10 kg.
Dealers said Indian edible oil prices were likely to fall marginally after Monday's base import price revision.
"The market had already discounted the reduction in base prices," said one Mumbai-based trader. "There will be only a marginal fall in domestic prices."
soyaoil futures slip, sugar up Indian soyoil futures fell on Monday on buoyant supplies, while sugar firmed with the government releasing less sugar in the market than anticipated for the January-March quarter, brokers said.
At 0708 GMT, the January soyoil contract on the Multi Commodity Exchange (MCX) had fallen 2.15 rupees to 337.40 rupees.
"The supplies have picked up due to crushing. But the demand has remained more or less at the same level. That is why the prices have fallen," said one Ahmedabad-based trader.
He said prices also weakened on market expectations that the government would lower the base import prices of vegetable oils.
January sugar futures at the National Commodities and Derivatives Exchange (NCDEX) rose 10 rupees to 1,836 rupees as the government released 3.65 million tonnes of sugar last week for January-March period, less than what traders had expected.
The government controls domestic sugar distribution, allocating fixed quantities that can be sold by producers every month.
Wheat futures rose slightly. The January wheat contract was up 1.60 rupees at 801.00 rupees per 100 kg.
"There will be slight upward pressure on prices because of the physical demand. Flour mills are buying now and new wheat will come to the market only at March-end," another trader said.
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