Low demand brings down groundnut oil prices

Reaches two year low as people shift to other edible oils like cotton seed, palm, soya

Groundnut oil prices are moving southwards in the wake of lower demand coupled with higher availability of groundnut for crushing . This could be gauged from the fact that the prices of groundnut oil have declined to touch the lowest level in last two years.

According to millers and traders, consumption of groundnut oil has drastically decreased as other edible oil prices are nearly half of that of groundnut oil. Lower consumption is also one of the reasons for downfall in price.

Groundnut oil price were quoted at Rs 1,715-1,720 per 15 kg tin on Monday in Rajkot market. This price was last seen in around August-September 2011. During May and June this year groundnut oil had declined by Rs 390 per tin.

Gondal-based groundnut oil miller said that good monsoon and ongoing sowing may pressurise the price further. So far groundnut sowing is very good as compared to last year.

"The Main reason for the dip in groundnut oil price is higher availability of peanut. Due to export related issues since January 2013, export of groundnut from India has decreased and consequently the stock of peanut has been diverted to the mills for crushing. As against it, demand is very low, which led to a fall in groundnut oil prices", said Samir Shah, president of Saurashtra Oil Mills Association (SOMA).

"Groundnut oil prices are easing since last two months and it may decline further as the demand is very weak. Most people have now shifted to other edible oil like cotton seed oil, palm oil and soya oil as these edible oils are cheaper than groundnut oil," said Ravajibhai Mandanka, president of Gondal Oil Mills Association.

The gap between groundnut oil and cotton seed oil is about Rs 610 per 15 kg tin. Groundnut oil price is Rs 1,730-1,735 per tin while cotton seed oil is priced at Rs 1,115-1,125 per 15 kg tin.

Similarly, 10 kg of palm oil costs about Rs 500-525 which is higher than groundnut oil loose by Rs 450. Likewise, soya oil is being traded at Rs 670-672 per 10 kg, lower by Rs 300 in comparison to groundnut oil loose.

Rajkot based miller said that due to downfall in the groundnut price millers have been stocked the groundnut in time of May on expectation of good demand in next month but it would not happened and market has fall down due to lack of demand. According to Mandanaka, groundnut oil price may continue to fall for next couple of week as there is no hope for demand to come in the market.