Edible oil prices ease due to higher production expectations

According to experts, this year price of majority of edible oils have gone down almost 10 to 40% in comparison to last year

Higher production of oil seeds has put prices of edible oils like palm, soya, and groundnut oil under pressure this year. Coupled with weak domestic demand, the prices have come down significantly.

 

According to edible oil industry experts, this year price of majority of edible oils have gone down almost 10 to 40% in comparison to last year.

 

While price of imported edible oil like soya oil and RBD palm oil has decreased about 11% and 7.5% respectively, sunflower oil saw a dip of 5.5% and grape seed oil declined nearly 16% compared to 2012 price level.

 

 

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Overall edible oil complex has shown downward trend this year. Soya, Sunflower, Groundnut, Palmolein, Palm oil price have come down. However, palmolein and palm oil have not declined as much as other oils because demand for bio diesel was good.

 

Wholesale prices of edible oils have come down by 10-12%, while retail prices have come down by 6-7%. "The reason being fantastic climatic conditions in South America, Canada, Russia and Ukrain, the main edible oil producing countires. Even in India climatic condition is good. Resulting in higher productivity. Malasia and Indonesia has also seen favourable weather conditions," top official of an edible oil company said. "The prices will continue to be lower for the next six months," he added.

 

Govindbhai Patel, managing director of Deepak Enterprise said, “Domestic oil price may continue to decrease further for some time as crushing is still higher. Crushing activity will gradually decline in coming days and pressure will reduce on the price. While palm oil price will not decline much as crop size is short.”

 

In domestic market price of groundnut oil fell about 40% while cotton seed oil decreased nearly 15% by the end of December 2013, compared to price level of 2012.

 

As per data compiled by The Solvent Extractors' Association of India (SEA), import of vegetable oils during December 2013 was 1.06 million tonnes compared to 908,587 tonnes in December 2012, up 18%. 

 

The overall import of vegetable oils during November and December 2013 was reported at 2.01 million tonnes compared to 1.60 million tonnes in previous year, rise of 25%.

 

December, 2013, has shown second highest record import of vegetable oils at 1.06 million tonnes, since 1994. BV Mehta, executive director of SEA, said, “This year all the edible oils prices are reeling under pressure due to expectation of higher production of oil seeds not only in India but across the world.”

 

Soya oil’s highest ever price quoted was Rs 75,504 per tonne in 2012, which has declined over 11% to Rs 67,200 per tonne in December 2013. Similarly, RBD palm oil price was Rs 65,433 in 2012 but was trading at Rs 60,500 per tonnes in December 2013.

 

The highest fluctuation was seen in sunflower oil during past one year. In September 2012, sunflower oil price was Rs 71,881 per tonne which increased to Rs 75,000 per tonne in September 2013, but there after it declined to Rs 68,000 per tonne in December last year.

 

With higher availability of raw material for crushing and weak demand, groundnut oil has been trading at four year low in recent times. Also, poor export demand for groundnut has further resulted in drastic downfall in groundnut oil prices this year.

 

In January 2013, refined groundnut oil traded at Rs 2,250 for a 15 kg tin, an all time high price, but currently the price of same was ruling around Rs 1,340-1,350, down about 40% from a record high. Current price levels in groundnut oil was last seen in January 2010.

 

Suresh Kaneria, managing director of Kaneria Oil Industries said, “Main reason for downfall in groundnut oil prices is due to higher availability of groundnut for crushing. Most of the stock in groundnut has been diverted to mills as export of the commodity has been nominal this year.”

 

As per the Union ministry of agriculture the estimated acreage under oilseeds as on October 17, 2013, was 19.49 million hectares against 17.76 million hectares in the previous year, up by 1.72 million hectares. Kharif oilseeds crop is estimated at 17 million tonns for the year 2013-14 against last year’s 15.18.million tonns. Overall oilseeds yield has increased to 867 kg/ha during current kharif crop from 855 kg/ha last year.

As per second advance estimates of production of oil seeds by agriculture department of India, total nine oil seeds production in India likely to be 32.83 million tonnes in 2013-14 as against 30.94 million tonnes in 2012-13.

The report mentioned that groundnut production estimated 9.14 million tonnes for kharif and rabi in this year, last year it was 4.95 million tonnes. Rape seed and mustard production has estimated 8.25 million tonnes while sunflower output has been predicted about 470,000 tonnes.

At present, groundnut oil price today hovered around Rs 1,315-1,320 per 15 kg tin, down from Rs 1,425-1,430 per tin in January. Soya oil traded at Rs 644-647 per 10 kg as against Rs 654-655 while palm oil prices slightly moved up from Rs 567-568 to Rs 598-600 per 10 kg in last two months.

Domestic Prices of Edible Oils (Mumbai  Market)
Oil	2012	2013
	(Highest price) in Rs	(December) in Rs
Rape seed Oil	85,996	72,300
Sun-flower Oil	71,881	68,000
Soybean Refined Oil	75,504	67,200
RBD Pamolein	65,433	60,500
Groundnut oil	2,250 (Jan-13)	1,320 (Feb-14)
Source : The Solvent Extractors' Association of India
(Edible oil price per tonne, groundnut oil per 15 kg)