Oil mills' capacity utilisation up on high seed supply

With oilseeds production touching record levels this year, crushing activity at oil mills witnessed a sharp surge over last year. Better pricing of edible oils and increased availability of seeds has improved the capacity utilisation of crushing units from about 40 per cent last year to an average 60-65 per cent at present.

“The edible oil market looks good with better price prospects. Our capacity utilisation is nearly 80 per cent, which is much more than last year. Currently, we are crushing mustard seed and soybean. Unlike last year, we see a parity in crushing activity this year as the availability of seeds has improved,” said Jayesh Patel, managing director, Vimal Oils Ltd.

Industry insiders believe the robust oilseed output has added glitter to the crushing activity. “Oilseed production has been good this year. This has not only improved the availability of seeds but has also reduced the dependence on imported oils. Currently, oil crushing units are operating at an average 60 per cent utilisation levels, which is much more than last year,” informed Govindbhai Patel, a Gujarat-based edible oil expert.

India’s oilseed output is estimated to cross 30 million tonnes in the year 2010-11 due to favourable monsoon and increased yield of oilseeds. According to the Solvent Extractors’ Association of India (SEA), the import of edible oils had decreased in the current year due to higher production of oilseeds during the kharif and rabi seasons. The crushing parity is believed to be good due to high prices of oil and export demand for oilmeals.

Gokul Refoils & Solvent Ltd has its units operational at a capacity utilisation level of nearly 70 per cent. Additionally, the company has also expanded its capacities by 25 per cent every year over past two years.

“From market’s perspective, past three-four months have been pretty tight. But as soybean crop has been good this year, we see better performance ahead. We have expanded our capacity in the past two years to 2.48 million tonnes per annum,” said a company spokesperson.

Meanwhile, groundnut crushing has witnessed a steep fall as large volumes of the commodity was exported in the overseas markets.

“Groundnut crushing has been very low. The capacity utilisation of groundnut crushing units in Gujarat has remained very low at around 15-20 per cent. This is mainly due to a large volume of groundnut - the hand picked selected (HPS) quality, is being exported and does not come for crushing,” said Patel.

However, analysts put a cautious view about the edible oil prices.

“Looking at the current situation, there seems to be no parity in the crushing activity. The edible oil demand is low and prices are almost stable. However, going forward, global factors may play a decisive role in the future price trend and lift them up by June-end,” noted Jagdeep Garewal, research analyst at Kunverji Commodities.