India once again slashed its edible oil import duty effective 10 September to rein in a persistent rise in food price inflation even as the overall August inflation rate is expected to remain steady at 5.60% in August. If the inflation rate materialises at 5.60% it would be the second successive monthly increase within the central bank target range of 2-6%.
Rising edible oil prices have been the main reason for fueling the rise in Indian food prices inflation. India is the largest edible oil importer in the world with palm oil accounting for nearly 60% of the import share. The base import duty was reduced by 5% on crude and refined palm and soft oils or down by down by 5.50% effective rate after cess and social welfare taxes are incorporated.
The duty reduction will give a short boost to Malaysian CPO futures at the opening on Monday but overall palm prices are on a bearish path at the back of improving supply outlook in Malaysia and Indonesia who account for 80% of global palm production. Malaysia August end-month stock jumped to 14 months high according to MPOB data released on Friday 10 September.