India extends edible oil stock limit rules by three months due to low participation

India has extended the timeframe of an October 2021 ruling which set an upper limit on the stocks of edible oil and oilseeds that wholesalers and processors could store as only six states had fully carried out the earlier order, the Union Ministry of Consumer Affairs, Food and Public Distribution said in a press release Feb. 4.

This is New Delhi's second policy intervention in as many months to ease edible oil prices, as the world's largest vegetable oil buyer tries to reign in domestic food inflation despite an extended rally in global vegetable oil markets since 2021.

The latest ruling will ensure that stock limits specified by the center will now be in effect till June 30, the ruling said, extending it from the earlier end date of March 31.

The October 2021 ruling left it up to all states and union territories to decide quantities of stock limits of oils and oilseeds themselves based on their available stocks and consumption, with varying guidelines on maximum permissible stock levels. On review, the ministry observed that only six states had implemented the stock limit order.

Since implementation of stock limits across all states [28] and union territories [8] is necessary to transfer the full benefit of price control to end consumers, the union government has now set uniform stock limits of edible oils and oilseeds for all states and union territories except for those six that already had mandates in place, the ministry said in its Feb. 4 press release.

According to the ministry, a stock limit of 100 mt of edible oil has been imposed on bulk consumers like depots of big chain retailers. Wholesalers and retailers can carry 50 mt and 3 mt of edible oil stocks, respectively.

India imports about 14 million-15 million mt of vegetable oils annually, with palm oil from Indonesia and Malaysia accounting for about half of the imports while soybean and sunflower oils make up the rest.

International vegetable oil prices reached an all-time high in January, rising 4.2% month on month on the Food and Agriculture Organization, or FAO's, monthly price index, the United Nations' agency said Feb. 3.

Vegetable oil prices have rebounded in January due to concerns of a possible reduction in export availabilities from Indonesia, along with labor shortages in Malaysia, the world's two largest palm oil suppliers while the largest soybean oil exporter, Argentina, struggles with unfavorable weather conditions.

S&P Global Platts price assessments showed that since the start of the year, the physical market prices of soybean oil FOB Paranagua, Brazil rose 10.7% to $1,442.93/mt while CPO FOB Indonesia rose 12% to $1,440/mt Feb. 3.