The State Trading Corp (STC) of India has stopped importing edible oils for the government as states are reluctant to lift the stocks as local prices have fallen, the government-run company's chairman said on Monday. In March, when prices peaked, the federal government had asked three state-run firms and a farmers' cooperative to import one million tonnes of vegetable oils for subsided sales to states.

 

"Prices have fallen now, demand from state governments has contracted and there is no need to import any more. States are lifting very, very slowly," STC Chairman N.K. Mathur told Reuters in an interview. A sharp drop in global prices has led to a series of defaults by some Indian trading firms, evoking strong reactions from suppliers in Malaysia and Indonesia.

 

On Monday, the benchmark January contract on the Bursa Malaysia Derivatives Exchange was up 17 ringgit at 1,626 ringgit, almost a third of its March peak of 4,486 ringgit. "Those who contracted at high prices are feeling the pinch and some of them may have defaulted but government companies have honoured commitments," Mathur said.

 

He said that although STC has stopped buying vegetable oils on behalf of the government, the leading trading arm of the commerce ministry would continue to import for its commercial clients. Instead of importing directly, a numbers of Indian vegetable oil refiners buy the cooking medium from government-run firms like STC, which imports palm or soyoil from major suppliers in Southeast Asia and the Americas.

 

"I will continue to import on requests from my buyers. No one has communicated to me to stop supplying to those who have defaulted," he said when asked if Malaysian or Indonesian firms had asked the corporation to halt supplies to defaulters.

 

Indian newspapers have reported that some suppliers from Malaysia and Indonesia have threatened to name and blacklist Indian firms, which have reneged on import contracts as prices have fallen sharply. The reports quoted suppliers saying Indian traders who had defaulted on contracts were now looking to source edible oil through state trading agencies such as the STC. Mathur said vegetable oil prices were expected to rise from next month.