Edible oil crushing down by 15-20% this year

Edible oil crushing this oil year (November to October) is expected to be lower compared to last year by 15-20% on the back of higher imports of edible oil as it is cheaper overseas coupled with lower arrivals of soybean on the spot markets. Also, only 40% of the total crushing capacity in the country is being used due to pricing disparity.

Last year, 33 million tonnes of edible oil was crushed domestically.

The disparity in crushing currently stands at $40 to $50 per tonne which is not viable for a crusher. Also, the margins have dipped and is almost negligible for the last two years which has had a negative impact.

“Due to farmers not bringing stocks to the market and also due to disparity and lower global prices of edible oil, edible oil crushing industry is being negatively impacted. There is a glut of edible oil globally due to which it is cheaper to import edible oil than crush oil seeds locally,” said Sandeep Bajoria, CEO of Sunvin Group.

Edible oil imports have constantly been hitting new highs as domestic consumption is constantly rising coupled with cheaper international rates of edible oil. Crude palm oil is currently being imported at $650 per tonne and crude soybean oil is being imported at $840 per tonne. Indian prices of RBD palm oil price on Kandla port is currently at Rs 55,000 per tonne.

Last oil year, edible oil imports stood at 11.8 million tonnes, which was record imports and this year it is expected to go up to 12.3 million tonnes, which will also be at an all time high. Domestic consumption of edible oil is rising two to three% every year.

“This year, around 700,000 tonnes – 700,500 tonnes of soy bean is expected to be crushed compared to 1.1 million tonnes -1.2 million tonnes last year. This year, crushing has been impacted in quite adversely. Usually this time of the year, around 60% of edible seeds is crushed but this year it is lower,” said Atul Chaturvedi, CEO of Adani Wilmar.

The sector has asked the government raise the import duty on crude palm oil to make the refining and fats business viable. Owing to a five% difference between crude and refined oil, the edible oil business has suffered immensely. Since the edible oil crushing and refining business offers disparity, large players are focusing on value-added segment, where business potential is quite high.

Solvent Extractors' Association of India has asked the government to raise import duty on crude vegetable oil to 5% from 2.5% currently and refined oil to 15% from 7.5%.