Edible oil prices rise as rains stay away

Prices of edible oils have started rising following the delay in monsoon rainfall.

Agriculture, and the edible oilseeds crop, was under threat and this has led to rampant speculation in oil markets here. The production of ground nut oil in Saurashtra and Gujarat would fall, traders warned.

The groundnut summer crop had been sold at low prices and farmers had sown less. Meanwhile, stocks had also dropped, leading to rise in groundnut oil prices, Sureshbhai Patel of Kaneria Mills said.

The summer groundnut crop had been stable while increased export demand had pushed up prices. Existing purchase commitment of 2000 metric tons within a week from Saurashtra and Gujarat pushed up prices by Rs 500 per tonne.

Edible oil, including groundnut oil, traders said they were holding low stocks. Groundnut oil and groundnut seed buyers from other states were facing the brunt of high prices.

Bhikhubhai Patel, a merchant in Rajkot, said the summer groundnut crop and export demand were matched, so a further rise in prices was possible. Prices of groundnut were at Rs 26500-31000 per tonne at present.

Gujarat farmers sown groundnut in 18,21,200 hectares (ha.), sesame in 3,51,000 ha. and cotton in 13,95,900 ha.

If rains were delayed, this crops will dry and yields would fall. Edible oil in tins were selling at Rs 850 per tin. Groundnut oil tins rose from Rs 780 to Rs 850 per tin.

Tins were at Rs 1000 in 2002-2003 and this price may be repeated, warned traders. Groundnut sold at Rs305-350 per 20 kg. in 2003-04.

Total oil demand was estimated at 120 lakh tonnes while output this season was at 50-60 lakh tonnes till date. Around 60 lakh tonnes of edible oil had been imported last year. The average groundnut crop was 22 lakh tonne in Gujarat.

Last year's groundnut yield per ha was 2400kg approximately but it could fall to 1200-1400 kg/ha. this year due to low rains. Most districts in Gujarat had very poor irrigation facilities and water supply was irregular.