Edible oil prices on the boil as rupee slides further
Delayed rains and firm global trend push prices north may rise further by 10%
Edible oil prices have indicated an uptrend amid firm global trend, a weak rupee and a delayed monsoon. The prices of key edible oils, including palm, mustard, cottonseed and soya, have surged by five-seven per cent over the past week.
"The monsoon’s progress seems to have halted for the past few days. There was a sustained fall in edible oils, both globally and in the domestic market. The sentiment is upbeat due to delay in monsoon here and firming global trends. Therefore, a spurt in prices is visible," said B V Mehta, executive director, Solvent Extractors' Association (SEA) of India.
Today, RBD (refined, bleached and deodorise) palmolein traded at Rs 601 per 10 kg, while groundnut oil prices stood at Rs 1,190 per 10 kg. Rapeseed refined was quoted at Rs 812 per 10 kg and cottonseed oil hovered at Rs 690 per 10 kg; while soyabean refined oil stood at Rs 715 per 10 kg. The rupee fell to a record intra-day low lof Rs 56.70 against a dollar, making imports of edible oils costlier.
"Rupee depreciation would jack up prices in the domestic market. This was not felt earlier as edible oil prices were lower globally, due to weak sentiment. But now, global prices have firmed up the while rupee has been sliding," said Mehta.
According to SEA data, import of vegetable oils increased 30 per cent in the first half of the oil year (November 2011 to April 2012). Total imports were 4.71 million tonnes (mt) against 3.6 mt during the same period last year.
"Weather conditions in the US are not favourable for soybean, while China has increased its oil purchases. Also, we have seen increased demand due to Ramzan. Overall, prices of edible oil have risen 8-10 per cent in the short term," said Suresh Kaneriya, managing director, Kaneriya Oil Mills.
Malaysian crude palm oil prices surged to its highest since June 1. September palm oil futures contracts on the Bursa Malaysia Derivatives Exchange rose 3.2 per cent to close at 3,041 ringgit ($964) per tonne, after surging to 3,058 ringgit.
Crude palm oil prices have jumped 15 per cent so far during the month. However, groundnut prices may see some correction as demand is lower and availability is increasing. The price may decline to Rs 1,950 per 15 kg in the next 15 to 20 days if foreign demand does not come through, said industry sources. About 75,000 bags of groundnut arrive every day in Gujarat markets.
In the non-edible oil segment, castor oil prices have gained Rs 100 per 10 kg to Rs 680-685 per 10 kg in the past two weeks. Experts attributed the increase in prices to a rise in industrial and mills demand.
"Prices in the spot market are gaining for the past 8 to 10 days as traders have increased their stock positions. Also, domestic demand is strong. The prices will continue to move up as we are expecting good buying from exporters too," said Rajubhai Pobaru, president of the Rajkot Commodity Exchange.