New Delhi: Despite several attempts by the Centre to cool off prices, crude palm oil has maintained its strong rally from 2021 and has risen about 10-15 per cent in the current calendar year.
The most-active May contracts on the Bursa Malaysia Derivatives exchange on Wednesday settled at 5,460 ringgits (Rs 97,655) per tonne.
It was at around 4,950 ringgits at the end of December. In 2021, the palm oil prices rose around 25-30 per cent.
Palm oil prices on Bursa Malaysia Derivatives is considered to be the global benchmark among trade circles.
In mid-2021, the Centre removed import restrictions on refined bleached deodorised palm oil, refined bleached deodorised palmolein, and another variant (palm oil and its fractions, whether or not refined, but not chemically modified) till December 31, 2021, which has now been extended till the end of 2022.
Besides, in late 2021, the Centre reduced the basic customs duty on refined palm oil from 17.5 per cent to 12.5 per cent till March 2022 as part of the measures it is taking to bring down edible oil rates in the Indian markets.
India imports a large chunk of edible oil requirements from Malaysia and Indonesia.
Oil palm kernel is crushed to extract crude palm oil and subsequently processed to make refined palm oil.
On top of that, the Centre suspended trade in futures contracts of several agricultural commodities for one year, of which crude palm oil is one of them.
“Crude palm oil prices soared to record highs in January at Bursa Malaysia exchange. Prices touch 5,750 Malaysian Ringgit. Higher crude oil prices, lower production and global supply shortages supported prices. Indonesia, the world’s largest exporter of palm oil, also reduced its export quota of palm oil,” said Manoj Kumar Jain, Director and Head of Commodity Research at Prithvi Finmart.
“Looking at the increased demand post pandemic, weather disturbance in South American countries and geo-political tensions in Easter Europe and Middle-East, edible oil prices to remain firm.”
Going ahead, in the short-term, 5,000 ringgits is a strong support for crude palm oil and resistance at 5,800-6,000 ringgits.
“It is looking positive. Floods in Malaysia and labour disruptions due to Covid restrictions caused supply bottlenecks. Restrictions in exports from Indonesia also triggered a global shortage of supply,” said Vinod T.P., Senior Research Analyst at Geojit Financial Services.
The Indonesian government reportedly recently mandated a minimum proportion of production to be sold locally in a bid to curtail a dramatic rise in domestic cooking oil prices.
Indonesia is the largest producer of oil palm, followed by Malaysia.
–IANS