2024 was the year of election and as expected brand Modi won
its third term. But for sure elections require huge funds which is funded by
private players. And here the big bull is definitely Adani.
Prerequisite info:
India imports most of its edible oil, especially Palm oil,
Soya oil, Sunflower being major ones, while Olive, Canola, etc. being minor
ones. Indian govt. levies import duties on these oils which had been stable
since past few years ranging from 5 to 10%. Although India doesn’t import
indigenous oils like coconut, mustard,
cottonseed, their rates are very much depended over the imported oils which has
major market share amongst Indian consumers.
Commodity Market:
While most of the oils are traded over commodity exchanges,
India since past 2-3 years have banned their trade, keeping in mind to avoid
speculations and unnecessary price hike in essential commodities. However,
internationally they are heavily traded, and are also traded by big importers
and companies of India on international exchanges to hedge their positions.
While, small traders are deprived of such benefits. Also, in another step to keep rates in check
and control, the govt. has been keeping a very strong MRP check over packaged
oils, whereby company could not print more than 15% markup on oil packagings.
So, the edible oil market in India, is largely depended over
international markets, especially on the exchanges on which they are traded.
Since, past 1 month, the Indian edible oils has been ringing
highs and highs on daily basis, despite the fact that the internationally they
have been trading with negative to range bound basis. So, when all was wondering why are Indian
commodity market especially oils are sky rocketing despite international market
of palm n soya going otherwise, the pandits gave theory as of less to no stock
on port for soya n palm oil. This is a
very least likely situation as the ports don’t have oils only when there are
shipping turbulences, or any hurricanes or storms in seas. So the giants never
go dry esp. when they can hedge over international exchanges. Still there was
an artificial scarcity being created and a rumour that government could
increase duties was doing rounds in markets.
Small traders were very skeptical in buying stocks as international
market was falling while Indian market was on rise.
The dirty game of Duty Hike:
Cabinet meeting which was done on tuesday, hike on cement
duty was the only announcement made. All believed once again govt didn't change
any duties on oil. However Adani refrained from selling any of imported oils.
They though were quoting rates they weren’t doing it for tankers and were also
making the sale close very soon after opening.
Adani through its
company Adani Wilmar and through its ports namely, Mundhra, Hazira, and others
is one of the largest importer of edible oil in the country.
Pandits were confused whats going on, while traders were
focusing on selling stock expecting market could reverse, Adani was keeping
quiet and holding its stock. And finally on friday late night at 10PM the govt
announces a hike of around 22% increase from existing import rates. A whopping
22% increase.
Imagine 1 month
to Diwali and an increase of almost 15- 16rs/Kg in edible oil rates. This is
under the pretex of helping Indian farmers. Really? Helping farmers or helping
Mr. #Adani .
Adani very well knew the govt. is going to increase import
duty, infact he would have been the one, lobbying for the increase.
If the govt really wanted to help farmers it could have
raised duty by 5% as oils are already at 1 year highs. But the government had
some obligations, I believe. They had to return the favour of elections.
They chose the time when the demand would be high due to festivals. Many naïve
final consumer would think its Diwali that is to be blamed for price hike. But
the innocent and poor will suffer at hands of the government and importers.
Farmers could have been made happy by buying at MSP or supporting prices by
2-3rs/Kg.
Btw second announcement of the same day on friday was open
of export of Basmati Rice. The timing chosen is also thought of friday night.
As the markets remain closed over weekends and there wont be
much reaction and on monday too there would be idd holiday and on tuesday many
places will have Ganesh Visarjan. What a master stroke. All thy donations
returned overnight, that too with more than 100% interest.
If you think over it, today Adani is not just in edible oil,
but trading in basmati and holding many leading cement companies, but I wont
comment over rice n cement as its not my arena but edible oil m sure a big game
has been played overnight.
A giant like
adani for sure must be holding more than 1 month stock of edible oil that the
whole of India can consume. Now imagine a rate hike of 15-16 rs per kg on it.
Its being malamal overnight.
The company Adani
Wilmar, which once Mr. Adani was considering to sell off after 1st
Hindenberg market crash, which was also not making enough profits for him, is
now sure to have an exceptional result this year. Or will he divert the funds
and profits in other firms…!! After all he is the current Superhero of our
country.
