"Due to the adulteration of rapeseed-mustard oil, a considerable demand has emerged for substitute edible oils. However, much of the spill over of this may not confine to Malaysian palmolien due to its high prices and will force traders look at the option of importing soft oils," SK Chadha of Vanaspati Manufacturers Association (VMA) said.

Many vanaspati manufacturers have already contracted soyabean from Rotterdam as the prices of RBD palmolien in Malaysia has increased from $650 a month back to 715 by August-end, he said.

"If the soft oil prices are attractive in terms of price, there would certainly be more imports," said KLM Chhabra,executive director of the Central Organisation for Oil Trade and Industry (Cooti). Chhabra said imports of soft oils, which are in crude form would be beneficial to the industry from all angles as it would enhance capacity utilisation and help ease prices of the commodity in the domestic markets.

The Mahathir Mohammed government's recent decision to fix exchange rate of ringgit against the dollar at 3.81 had also added to sentiments of the traders, trigering of speculations about the nature of palmolien prices, Chadha said.

Currently, Brazil, Argentina and the United States are the major suppliers of the soft oils and according to industry estimates, the prices of soyabean oils are likely to come under further pressure as a bumper crop is expected in the US.

Vanaspati industry alone imports on an average 12,500 tonnes of edible oil every month to meet its raw material requirements. More than 80 per cent of the country's imports of edible oils to bridge the gap between demand supply in the past has beenRBD Malyasian palmolien. The entry of the State Trading Corporation (STC) into the Malaysian market for buying 1.5 lakh tonnes of palmolien for supply through the Public Distribution System (PDS) had also pushed up the prices, Chadha said.

Even as the traders are analysing the pros and cons of switching over to soft oils, a section of the industry is of the view that the shipment cost involved and delayed delivery could offset the price advantage of crude soft oils. Any price advantage that soft oils offer in the South American markets would be eroded by the transportation cost and the long time taken for the commodity to reach Indian shores, Malaysian palm oil promotion council, country representative Ashima Raheja said.

According to Raheja with the ban on mustard oil and government adopting a tough posture against the traders, a considerable portion of mustard oil consuming population would switch over to branded refined edible oils.

Delhi Vegetable Traders Association president Lakshmichand Agarwalsaid import of soft oils would definitely be cheaper but the gains would be minimised by the delayed delivery. Agarwal said increasing imports of palmolien and other edible oils would have adverse impact on the interest of the domestic farmers and added that the government should work out a strategy to contain the situation.