Slump In Oil, Oilseed Prices May Be Over

The 30-month slump in edible oil and oilseed prices seems to be over. Spot prices of major oils and oilseeds such as groundnut, castor seed, sesame seed and sunflower have gone up almost 30 per cent since February 1, 2002. Maganlal Chheda, president of the Bombay Commodity Exchange, attributes this rise in domestic prices to firm trends in the international commodity markets.

In Mumbai, prices of edible oils have moved up 15-25 per cent since February 1, prices of oilseeds 15-30 per cent and those of oilcakes 15-23 per cent. In the international markets, prices of castor oil have firmed up 32.26 per cent to $660 per tonne from $499 per tonne two months ago. Prices of groundnut increased to $2,300 per quintal from $2,000 per quintal in early February. Sesame seed prices have increased to $550 per tonne from $450 per tonne.

 

Groundnut oil, which was available at Rs 362 per 10 kg in Mumbai during the first week of February, firmed up 12.71 per cent to Rs 408 per 10 kg on Tuesday. Sesame oil prices increased 14.06 per cent to Rs 365 per 10 kg in the same period. Prices of castor oil (commercial grade) moved up 25.3 per cent to Rs 312 per 10 kg while prices of castor oil (ready) increased 24.14 per cent to Rs 324 per 10 kg. Palmolein oil prices increased 12.54 per cent to Rs 314 per 10 kg during this period.

In the case of oilseeds, groundnut prices moved up 18.14 per cent to Rs 2,540 per quintal after the first week of February, sesame seed (95/5 variety) prices shot up 28.61 per cent to Rs 2,450 per quintal.

In oilcakes, groundnut cake was up 22.96 per cent at Rs 8,300 per tonne while sunflower extraction rose 15.22 per cent to Rs 5,300 per tonne.

The rise in domestic prices of groundnut and groundnut oil is due to higher export interest as well as a rising demand-supply gap. India is a major importer of edible oils. Although the total production of oilseeds has gone up from 180 lakh tonnes during 2000-01 to 205 lakh tonnes, there is a demand-supply gap of around 4 million tonnes of edible oils. This is because the current production of 205 lakh tonnes oilseeds can extract around 6.7 million lakh tonnes of edible oils. Assuming a per capita consumption of around 10 kg, there is a shortage of around 4 million tonnes of oil.

The rise in the prices of palmolein and sunflower oil is largely on account of rising demand from Asian countries like China and Pakistan. The surge in soyabean oil prices is attributed to Argentina's economic crisis which has forced it to stop exporting soyabean. India imports palmolein from Indonesia and Malaysia. It imports soyabean largely from the US, Argentina and Brazil while it gets sunflower oil from Europe and rapeseed oil from Canada and Europe.