Groundnut oil prices surge to a record high

Increased buying ahead of Janmashthami festival coupled with shortage of groundnut has pushed groundnut prices to a record high of Rs 1465 for a 15 kg tin in Saurashtra region of the state. Groundnut oil prices have increased by Rs 40 per tin during this festive week.

The increased offtake of groundnut oil could be gauged from the fact that retailers sold around 100-125 tins per day this week as compared to average daily sales of 40-50 tins in normal days. The price of groundnut loose too has reached to Rs 875-880 per 10 kg.

A retail shopper in Rajkot, said, “The rise in demand is due to the festival, post which it will normalise.” However, other industry players do not see prices coming down in near future. “Price will not ease till the new season starts. New crop of groundnut will come to the market after two months and prices would grow steadily during this period. Even if a few corrections come in, there will be an overall price rise”, said Samir Shah of Rajmoti oil mill, Rajkot.

A miller from Jamnagar said, “It is true that use of groundnut oil has gone down but at present there is no availability of groundnut for crushing to fulfill the current demand. That’s why price has gone up.”

A Rajkot based groundnut trader said, “The Kharif season production of groundnut was around 12 lakh tonnes in 2009-10, almost half compared to the year before. The summer production of groundnut is also down 45 percent to 1.20 lakh tonnes this season. This, together with good exports and buying for other than groundnut oil products like pea nuts and butter has resulted in low stock of the commodity. Currently 4000-6000 bags (one bag weighing 60 kg) of groundnut are arriving in various mandis of Saurashtra.

Since, the production of groundnut production was around 12 lakh tonnes last year, the supply has gone down this year. Last year, the groundnut cultivation area shrunk by 2 lakh hectares. This kharif season, which began in June, the groundnut cultivation area shrunk by a further 10 percent, indicating a further decrease in output.Shortage of supply has kept the prices of groundnut prices firm at Rs 691-692 per 20 kg.