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Prices of cooking oils are set to fall this month: Industry executives

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Prices of cooking oils are set to fall this month: Industry executives

Prices of cooking oils are set to fall this month, after having gone up more than 50% in the past one year, said industry executives.

In the wholesale market, prices of all kinds of cooking oils have fallen 15% in the past fortnight to one month. Consumers at the retail end will feel the impact of falling prices by the end of this month when the old stocks with the retailers are cleared and the new stocks fill up the shelves, said the executives.

In May, retail inflation of cooking oil and fats was 30.84%, one of the major factors that pushed up the overall food inflation to 5.01%.

“Consumers will get some relief in prices by the end of this month. Internationally, prices of edible oils are correcting and the impact will be felt in India too, which imports oils to meet 60-65% of its domestic consumption,” said Atul Chaturvedi, president of the Solvent Extractors Association of India (SEA).

In the past few months there has been unprecedented price increase in edible oils which has led to a decline in domestic consumption. Chinese buying, stimulus money entering the commodity sector, la Nina weather problems in palm and soya producing areas, labour problems in Malaysia due to Covid, aggressive bio diesel thrust in Indonesia and renewable fuel from soybean oil in the US and Brazil are some of the major reasons for the price hike in edible oils.

“But the situation has reversed in last fortnight to one month due to a number of reasons which include expected rise in oilseed production in this year’s kharif as farmers, who have got better prices for their crop, are keen to plant more soybean, better weather conditions in the US which is beneficial for soybean production and also rising palm production in Malaysia. All these factors have started correcting edible oil prices,” said Sandeep Bajoria, CEO of oil broking and consultancy firm Sunvin Group.

In 2020, sunflower acreage in Russia and Ukraine had fallen, resulting in a shortage of sunflower oil. However, this year, spurred by a record acreage expansion and the anticipated favourable weather outlook, production of sunflower oil will be higher and prices are expected to start falling from August when the harvest begins. “New areas of land for sunflower crop cultivation in Russia, Ukraine, the EU, Argentina, Turkey and Moldova should trigger the further growth of sunflower seed production,” said Bajoria.

Refined soya oil prices have fallen 15% in the past one month, whereas crude palm oil prices have fallen more than 14% in the same period. In the last fortnight, mustard oil prices have fallen to Rs 135-137 per litre from Rs 160 per litre, groundnut oil prices have dropped to Rs 138 per litre from Rs 165 a litre and rice-bran oil has moved down to Rs 135 per litre from Rs 150 a litre in the wholesale markets. Sunflower oil prices have also dropped to Rs 160 per litre in anticipation of a better crop.

“Delay in Malaysian shipments and fall in palm oil exports to India and Europe on decline in domestic consumption in the respective countries have led to a fall in prices,” said Vinod TP, analyst at

. “On the domestic front, higher edible oil imports and higher domestic stocks also pressurised Indian market. Overall, prices are likely to see some more corrective selloffs.”

The drop in prices of palm oil, which constitutes a large chunk of India’s oil imports basket, has brought a relief to the trade. India’s oil consumption is expected to taper to 21.5 million tonnes in the current oil year (November 2020-October 2021) due to Covid-19 and rising prices. Of this, 13.2 million tonnes of oil is imported and palm oil accounts for 7.2-8 million tonnes.

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