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Traders price in import duty hike on vegetable oils |
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MUMBAI: Commodity traders are pricing in the possibility of the government hiking the import duty on crude and refined vegetable oils, which, while raising edible oil prices for households, could save the Indian farmer from ruin, said Sandeep Bajoria, CEO, Sunvin group, one of the world's largest brokers of oils and oilseeds.
Vegetable oil industry lobby, Solvent Extractors' Association (SEA), on Monday requested the government to raise the duty on crude vegetable oil to 25 per cent from 7.5 per cent currently and on refined oil to 45 per cent from 15 per cent to protect farmers and local refiners. This after it estimates oil imports increasing to 14 million tonnes valued at Rs 65,000 crore from 11.8 million tonnes last year.
Near month crude palm oil, or CPO, futures, traded the most in India on commodity bourse MCX, witnessed a 0.3 per cent rise in price to . 394.6 per 10 kilos (whole` sale price) intraday Tuesday from the previous day's five-year closing low.
"This," according to Bajoria, "was at an almost eight rupee premium to the Rs 387 landed price of CPO, indicating that futures market participants are pricing in a hike in duty ." Data on traders' outstanding positions or open interest (OI) gels with Bajoria's claim on traders mounting fresh bullish bets.
The rise in CPO price was accompanied by an increase in OI to 4,523 lots on Tuesday at the time of writing from 4,181 lots a day ago. When OI rises in tandem with price, it means fresh bullish (long) bets are being raised.
On wire re ports of the NDA government having plans to invest $1.5 billion in oil palm cultivation over the next three years to reduce dependence on imports, Sa tendra Aggarwal, COO, Ruchi Soya Industries, said, "We are completely in agreement with what the PM is doing and talking about. Our belief is our farmers should get more. In India, of the 20 million tonnes of oil used, 14 million tonnes is imported."
SEA's executive director BV Mehta told ET that the gov ernment's plan made "imminent" sense, given that of the total demand for oils, palm products accounted for 45 per cent.
Source : economictimes.indiatimes.com
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