Domestic edible oil producers to cut prices by 15%

For existing inventory, companies to offer discount on package's existing MRP

In a major relief for consumers, edible oil producers are looking to cut their product prices by up to 15 per cent effective immediately to pass on the similar fall in global markets and proportionate decline in seed prices locally.

Indian edible oil (both branded and unbranded) producers, however, plan to offer discounts on the maximum retail price (MRP) on the consumer packs produced earlier. Lose retailers, too, would pass on the price fall in the international and domestic markets to consumers. Meanwhile, a cut on the MRP would depend on the sustainability of the present price level for long.

The 15 per cent price cut in the edible oil basket is set to reduce kitchen budget by 1.5 - 2 per cent for average Indian households considering cooking oil's 10 per cent contribution to the entire kitchen expenses.

"The current fall in edible oil and oilseeds can be attributed to a combination of factors including bumper soybean output in North and Latin Americas, weak demand from global bio-diesel sector due to subdued crude oil prices and bumper seed output in India this year. Every price fall in the raw materials is immediately passed on to customers and the current one is no exception," said Atul Chaturvedi, Chief Executive Officer (Agri Business), Adani Wilmar Ltd, the producer of Fortune brand edible oils.
 

Kolkata-based Emami Ltd, the producers of Healthy & Tasty brand edible oils has also decided to pass on the oilseed and CPO price fall to consumers.

"We are targeting the large number of population in the middle / upper middle of the pyramid through its high quality and value for money products. Keeping in mind the market scenario and benefits of our consumers, prices are taken care of to meet the objective of our brand," said Aditya V Agarwal, Director, Emami Group.

Meanwhile, the benchmark crude palm oil (CPO) price declined by 18 per cent so far this calendar year to trade currently at MYR (Malaysian ringgit) 2669 a tonne on bumper output globally. The Germany based edible oil analyst Thomas Mielke forecasts the world to see an additional 5.5 million tonnes of CPO output this year with Malaysia and Indonesia to witness 2.53 million tonnes (to 19.85 million tonnes) and 3 million tonnes (to 35 million tonnes) respectively of more CPO production in 2017.

Data compiled by the National Commodity & Derivatives Exchange (NCDEX) Ltd showed 11 per cent decline in CPO prices to Rs 518.80 per 10 kgs for ex-Kandla delivery. Similarly, prices of refined (refined, bleached and deodorized or RBD) oil slumped by 10.81 per cent to Rs 553 per 10 kgs. Prices of refined soya oil in Indore, however, declined by 14.17 per cent to Rs 625 per 10 kgs. Seed prices also moved in tandem with oil with mustard seed fell by 15 per cent to Rs 3767.50 a quintal.

"Internationally, the prices of soy oil are under pressure on Chicago Board of Trade (CBOT) due to higher world soybean production and reports of recover in palm oil production in Malaysia and Indonesia,"  said Ritesh Kumar Sahu (fundamental analyst, agri commodities), Angel Commodities Broking. 

Moreover, the Malaysia is targeting to implement B10 biodiesel blend this year from B7 currently but seen several delays since last year due to several political reasons. However, US lifted the biodiesel targets for the year 2017 in November last year but the implementation is yet to finalize in the Trump Administration, said Ritesh Kumar Sahu (Fundamental Analyst agri commodities), Angel Commodities Broking.
 

Meanwhile, the government has cut the base import price of all edible oils. The steepest cut was done for crude palm oil (CPO) by $22 to $725 per tonnes while base import price of crude soy oil by $14 to $770 per tonnes for second half of April. This is the fifth consecutive cut in base import price of both CPO and soy oil which is fixed every fortnight.

In another development, government has cut customs duty on import of sunflower seed to 10 per cent for April - September from 30 per cent which may result into imports of around 1 million tonnes of sunflower seed during next two quarters i.e from April - September. A slowdown in consumption growth and domestic availability has kept imports under check.