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Chinese demand pushes up groundnut oil prices by 15%

The surge in demand, however, has not been met by sufficient quantity of groundnut crushing, resulting in lower production of groundnut oil this year

Vimukt Dave  |  Ahmedabad 

Groundnut
Image via Shutterstock

Surge in from in the month of March has led to a rise in oil prices by almost 15% over the past two weeks. Additionally, the rise in the overall cooking oil market globally led by tight supply of palm oil has also pushed oil prices in domestic

The surge in demand, however, has not been met by sufficient quantity of crushing, resulting in lower production of this year. Moreover, with prices going up, domestic retail for groundnut has declined, too.

At the wholesale level, increased to Rs 1,070 per 10 kg from Rs 935 per 10 kg a fortnight ago, a rise of 15%. prices have gained from Rs 1,620 per 15 kg tin to Rs 1,800 a tin in the past fortnight. Since the beginning of the season that started in October 2015, groundnut oil prices have risen by 26% in retail

"Current uptrend in groundnut has been mostly driven by huge surge in which was unexpected. Exporters have contracted about 15,000 tonnes order for in March and now they are buying heavily to fulfill it. At present, mills are not capable of supplying such a big amount as raw material is not available," said Suresh Kaneriya, managing director of Kaneriya Oil Industries.

While is for about 250 tonnes, mills are only 100-120 tonnes a day. This is because groundnut arrival has fallen to 8,000 bags a day in Gujarat and other states such as Rajasthan, Karnataka, Andhra Pradesh and Telangana where the combined arrival is not more than 10,000 bags.

"At this time supply is not sufficient to match the demand. In this situation prices may even go up to Rs 1,100 per 10 kg in wholesale market soon," said Ravaji Mandanaka, president of Gondal Oil Mills Association (GOMA).

The Central Organization for Oil Industry and Trade (COOIT) has estimated 3.23 million tonnes of groundnut production in India for the year 2015-16 as against 3.52 million tonnes in 2014-15. Recently it predicted a summer production of 1.24 million tonnes as against 1.28 million tonnes.

Govind Patel, former president of Solvent Extractors’ Association (SEA), and edible oil expert said, "As global edible oils prices have gone up because of supply crunch mainly in palm oil, this has impacted in Indian market."

Traders believe that there might not be much relief from the price rise in near future with prices expected to rise in April as well.

First Published: Sat, April 02 2016. 12:52 IST
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