Usually, traders are quick to jack up prices of essential commodities on the slightest indication of possible shortage in these commodities. Reports of draught in Gujarat and Rajasthan should normally have seen prices of essential commodities shooting skyward.

However, this has not yet happened in Mumbai. Edible oils, for example, have been on the slide for the past few weeks. And these are seen sliding further as there are "more than sufficient stocks in the pipeline."

Wheat granaries are bulging, and barring marginal uptrend in prices of fresh stocks, prices remained almost static. The Government is in a fix to store the ever-rising stock of wheat in the Food Corporation of India's godowns. Sugar prices have, of late, begun looking upward, mainly due to the 60-per cent import duty introduced last month. Barring these few blips, prices of almost all essential commodities are on the slide. There are simply no signs of any shortage of these commodities in the market.

The upshot? Speculators and traders have been prompted to go short in edible oils on the commodity exchanges. Traders say there is more than sufficient stock of edible oils in the country and the supply of oilseeds from the recent rabi harvest was also "adequate".

All eyes are, however, fixed on the climatic conditions till mid-May whereafter, traders say, actual situation of the impending monsoon can be gauged correctly. "The draught-induced fear is not as alarming as is being made out by the Government", said a highly-placed source in the Bombay Oilseeds and Oils Exchange (BOOE). "Maybe, the Government has woken up now, but the trading community remembers very well the effect of last year's poor monsoon, and therefore, there is no panic on the price front in the market despite news of the draught early this month".

Moreover, a cyclonic storm during the first week of May is not ruled out. Traders say there is "more than sufficient" stock of edible oil in the country, what with continued rise in cheap imports of RBD and crude palm oil in the country. Traders say there's a stock of over four lakh tonnes. According to the BOOE source, despite the poor monsoon last year, the arrivals of oilseeds in the mandies over the past few weeks, though low, has been "more or less sufficient".

While the big, cash-rich farmers are known to hoard their seed produce each season in the hopes of better prices, the cooperative agencies are said to be releasing their stocks in the mandies which has kept the oilseed prices relatively stable.

"Forget last year's poor monsoon, we expect a bumper summer crop of around 1-1.2 lakh tonnes of groundnut crop this season not just from Gujarat, but even Tamil Nadu, Andhra Pradesh and other states", said a leading oilseeds trader. "So, it would be better for the country to export costlier groundnut oil and import cheap palm oil and maintain the overall supply of edible oil in the country". Groundnut oil (ready, Mumbai) currently is quoted at Rs 368 per 10 kg against imported palmolein at Rs 213 per 10 kg. Prices of both these oils have slipped in Mumbai over the past few weeks (see adjoining table).

Continued flow of imported RBD palmolein and crude palm oil from Malaysia and Indonesia is said to be one of the major reasons for the local edible oils market to be sluggish. This, traders say, is because China is currently out of the palm oil market (because of its huge forward contracts in mid-February this year). China's absence has pushed Malaysian RBD and CPO prices down in the international markets. It is this cheap palm oil which is being diverted to the Indian markets keeping the local edible oil prices under check.

"There is simply no fear of shortage on the edible oils front," said another oilseeds and oils trader. "The favourable import policy and cheap palm oil prices on the international front keeps the edible oil prices under check".