India sharply raised base import prices of soybean oils on Friday and marginally increased palm oil prices which traders said could temporarily alter the ratio of purchases of the two oils.
Traders said while the move reflected a rise in the global prices of the oils the changes in soyoil prices were steeper than expected and would turn the market bullish. India, the world's leading edible oils importer, buys palm oils from Malaysia and Indonesia, and soyoil from Argentina and Brazil.
It fixes base prices to calculate customs duties and prevent any loss of revenue due to under-invoicing by importers. Traders pay duties on the base value irrespective of the prices paid for the oil.
The price of crude palm oil was raised to $432 per tonne from $428, while that of crude soybean oil was increased to $566 a tonne from $529 a tonne, the government said in a statement.
"The trade was expecting an increase of $18-20 per tonne in the prices of soy oils, but this is steeper," said Govindbai Patel, a leading edible oils trader.
"The impact should be bullish and the ratio of palm oil in the imports might go up by about 5 to 10 percent," he said. India currently imports about 60 to 65 percent in the form of palm oils and the remaining as soy oils.
The government raised the price of RBD palm oil to $459 a tonne from $443, and other palm oils to $446 a tonne from $434. Crude palmolein prices were set at $460 a tonne against the previous $450, while RBD palmolein was fixed at $463 a tonne, up from the previous $453. Other palmolein import prices were set at $462 a tonne, raising it from $452 earlier.
Another trader said the domestic market had factored in the increase in the prices to some extent, but the changes would further push up the prices.