Groundnut oil prices down on weak demand, robust supply

At Rajkot wholesale market, groundnut oil is trading at Rs 1,150 per 10 kg on Monday, which was about Rs 1,400 at the beginning of Sept

With supply rising even as demand is down, groundnut oil prices have fallen 13 per cent in the retail and 18 per cent in the wholesale markets in the past 20 days.

Higher crop estimates could put further pressure on the prices, say millers and traders. At a Rajkot wholesale market, groundnut oil was trading at Rs 1,150 for 10 kg on Monday – down from Rs 1,400 at the beginning of this month. “Groundnut oil prices had touched record high in August due to festival demand and scarcity of groundnut for crushing. After that, demand has gone down and selling from stockists has improved, which increased the supply of the raw material. This has pressurised the groundnut oil prices during the September,” said Kishor Akabari, a Jamnagar-based edible oil broker.

Currently, the daily arrival of groundnut is around 15,000 bags. Buyers are holding purchase expecting further price reduction.

Akabari said: “Supply of groundnut will gradually increase with the arrival of new crop soon, which may decrease the groundnut oil prices to Rs 1,000 for 10 kg in the wholesale market in next month.”

As sowing of groundnut has been robust in the ongoing kharif season, the sector estimates higher production – at 3.5 million tonnes (mt) against last year’s 3.2 mt.

Suresh Kaneriya, managing director of Kaneriya Oil Industries, said: “Favourable monsoon has increased the groundnut sowing and this may translate into higher production of groundnut. Gujarat, the highest groundnut-producing state in India, might produce 2-2.5 mt.”

According to data by the Department of Agriculture, groundnut sowing has risen to 4.68 million hectares as on September 16 this year, up from 3.62 million hectares in the corresponding period last year.