Edible Oil Prices Set To Soar
Prices of groundnut oil and castor oil are set to soar in coming weeks following declining crop estimates.
Commodity brokers are expecting a 10-15 per cent decline in groundnut production in the coming year.
Edible oil traders feel groundnut oil and castor oil prices are likely to remain firm in the coming weeks because of strong demand and falling stocks in the Mumbai, Ahmedabad and Rajkot markets.
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They, however, say the soft oils, palmolein and soya, are mostly imported and hence their prices may remain stable.
"With imports strong, local prices for both these edible oils would remain within reasonable levels in the coming weeks," said Navinchandra Shah, president, Bombay Oilseeds and Oils Exchange Ltd (BOOE), the premier commodity bourse in the country.
Groundnut oil prices closed at a record high of Rs 545 per 10 kg on the Mumbai markets on Friday. Castor oil also touched a new high at Rs 430 per 10 kg.
Palm oil closed at Rs 358 per 10 kg, up Rs 3 over Thursday's close. Castorseed (spot) increased to Rs 1,968 per quintal, while December futures were quoted at Rs 1,731 per quintal.
"The crop situation in Gujarat and south-Rajasthan is not too encouraging. Rainfall in areas of Banaskatha district (north Gujarat), Hallar and Kutch districts has been very low. These areas are currently affected due to the lack of the second rains. A 10-15 per cent shortfall cannot be ruled out," Shah said.
Groundnut production in Saurashtra last year stood at 17 lakh tonnes, while the overall kharif production figure for groundnut oil across all states was 55 lakh tonnes.
Kushal Thaker, a leading commodity futures broker at BOOE member-broker Prophecy Investments, said: "While the lack of rains has affected a section of the groundnut bowl in the country, in other areas like Andhra Pradesh, farmers have shifted to other oils like sunflower. Further in case of oils like palm oil and soya oil, the import prices have been affected by the weakening of the rupee in recent times."
"The mills have no option but to increase selling prices. Further, the government has not come out with the vegetable oils positions order. They would prefer to remain cautious till the market stabilises further," Thaker added. Demand for most edible oils is expected to remain strong till December on account of the festive season. Further, export commitments of castor oil to Brazil and China (who have been aggressive buyers in recent times) will continue.
Oil traders feel among the edible oils, linseed oil will exhibit the greatest degree of price stability as production levels have remained constant over the past five years. Castor oil production in the country was at 6.5 lakh tonnes last year.