Prices of palm oil — the staple fat used in the food processing and bakery industry — have almost equalled that of Soyabean oil, something which industry sources say has never happened before. Curbs on exports imposed by Indonesia, the largest producer of oil, and the general volatility in the commodity markets are being blamed for this price rise which is expected to continue for some time.

On Monday, Refined Bleached and Deodorised (RBD) Palmolein — the form in which solvents and extractors import it from producing nations— was priced at Rs 1,42,00 per tonne. This was more or less similar to the cost of crude degummed Soyabean oil (ex Mumbai) of Rs 1,48,00 per tonne. Crude palm oil (ex Kandla Port) was priced at Rs 1,45,00 per tonne. (Data source- Solvents and Extractors Association of India).

RBD Palmolein is obtained from refining crude oil of which Indonesia is the largest producer and India is the largest importer of edible oil in the world. Retail prices of both soya and palm oil were between Rs 150 and 140 per litre, with industry sources talking of further escalation in days to come.

For the solvent and extractors industry, Monday also saw crude palm oil reaching its historic high price of 765 Malaysian Ringgit/tonne in the Malaysian derivatives markets.

B V Mehta, executive director of Solvent and Extractors Association of India, credited this to the supply chain constraints due to the Indonesian government’s internal trade policy. “The Indonesian government has mandated that every exporter would have to sell 20% of their shipments at highly subsidized prices within the country for the rest 80% to be exported. This has put a delay on the supplies and the extra cost is mainly due to this,” he said.