HUL, Britannia, Marico drop up to 6% as Indonesia bans palm oil exports

Palm oil is used in products like cooking oil, processed foods, cosmetics and biofuels.

Shares of fast moving consumer goods (FMCG) companies dropped up to 6 per cent on the BSE in Monday’s intra-day trade after Indonesia, the world's top palm oil producer, announced export ban on palm oil from April 28, 2022. Palm oil is used in products like cooking oils, processed foods, cosmetics and biofuels.

Frontline stocks like Hindustan Unilever (HUL), Britannia Industries, Godrej Consumer Products, and Marico were down between 4 per cent and 6 per cent on the BSE. At 09:30 am; the S&P BSE FMCG index was down 1.7 per cent, as compared to 1 per cent decline in the S&P BSE Sensex.

Indonesia meets nearly 45 per cent of the total palm oil supplied to India annually. According to reports, exports have been halted to check soaring domestic prices of palm oil which created unrest in the country.

India imports around 13-13.5 million tonnes of edible oil every year, of which around 8-8.5 million tonnes (around 63 per cent) is palm oil. "If monthly supplies of around 300,000-325,000 tonnes of palm oil stop from May onwards it will cause a sharp escalation in edible oil prices, which have been already been on the boil due to the ongoing Russia- Ukraine crisis," the Business Standard reported. CLICK HERE FOR FULL REPORT

Meanwhile, ICICI Securities believes FMCG companies are expected to witness dismal volumes in January-March quarter (Q4FY22). " FMCG companies are likely to witness muted volumes in Q4FY22 due to steep price hikes leading to down trading to economy brands or smaller stock keeping unit (SKUs). They are likely witness 200-400 bps gross margin contraction due to continued inflation in crude, palm, milk & wheat," the brokerage firm added.