Indian soyaoil futures fell on Friday after the government said it would continue with a freeze on tariff values, used to calculate import duties. Sugar also dropped, extending a lengthy fall due to bulging supplies from mills.
The June soyaoil futures on the National Commodity and Derivatives Exchange (NCDEX) were down 3.85 rupees at 482.60 per 10 kg, while May futures had lost 2.20 rupees to 490.45. "The statement of the finance minister pushed soya down," an analyst with a Mumbai-based brokerage said.
Finance Minister Palaniappan Chidambaram told parliament tariffs, which have not been revised for several months to help tame rising inflation, despite a sharp rise in vegetable oil prices in overseas markets, would remain frozen.
Importers pay duty irrespective of the price at which they purchase oils to prevent underinvoicing. A drop in global soyaoil prices also pulled Indian futures down, the analyst said.
India, a top vegetable oil importer, buys palm oil from Malaysia and Indonesia, and soya oil from Brazil and Argentina. Prices of soya and palm oils move in tandem as both compete for the same market.
The analyst said sugar fell on record output forecasts of around 26 million tonnes in the year to September 2007, up from 19.3 million tonnes last year. May sugar futures on the NCDEX were down 9 rupees at 1,225 per 100 kg, and June futures had fallen by an equal margin to 1,249.