Cooking oil prices could rise further
Posted: Posted Date – 8:44 PM, Sat – 23 Apr 22
Hyderabad: Cooking oil prices are likely to rise as Indonesia decided to stop exporting palm oil. Indonesia is the largest producer of palm oil. High local inflation forced the government to halt exports to ensure there were sufficient stocks for domestic consumption.
“Indonesia issued a statement stopping exports from April 28. In itself, this is to control inflation in their home country. Indonesia has a production of 46 million metric tons (mmt) and it needs about 15 mmt for domestic consumption. Also, they need about seven mmt for their biodiesel production. Based on these numbers, they need exports in one form or another. We will have to wait and watch for a few more days for more clarity,” P Chandrashekhara Reddy, Senior Vice President, Sales and Marketing at Gemini Edibles and Fats India, said of the industry trends.
There is no clarity yet on what will happen to the contracts that Indonesia has already entered into. “What will they do for the contracts already concluded, it is to be seen?”, He said. However, these developments will have an impact on India’s domestic oil prices.
Currently, palm oil is sold at around Rs 175 per liter in retail stores. The price of rice bran is around Rs 185, groundnut Rs 220, blended oil Rs 190 and sunflower oil at Rs 230 per litre. Cooking oil prices have already risen following the military dispute between Russia and Ukraine, two major producers of sunflower oil.
In a video released, Indonesian President Joko Widodo said he wanted to ensure food availability in his country, after global food inflation hit an all-time high following Russia’s invasion of the country. Ukraine, one of the main agricultural producers. “I will monitor and evaluate the implementation of this policy so that the availability of cooking oil in the domestic market becomes abundant and affordable,” he said.
Industry body Solvent Extractors Association of India (SEA) said Indonesia’s announcement will also hurt consumers in India and other countries.
Global crude palm oil prices have surged this year due to growing demand and weak production from major producers. The Black Sea region between Russia and Ukraine accounts for around 76% of global solar oil exports. Commercial shipping in the region has been severely affected since February. Soybean and rapeseed oil supplies were also affected due to lower harvests in Argentina, Brazil and Canada.
Palm oil and its derivatives find use in processed foods, cosmetics and biofuels. In March, about 5.5 lakh tons of palm oil landed in India, compared to 4.54 lakh tons in February this year. Wholesale inflation rose to 14.5% in March from 13.11% in February, and higher prices for edibles will further aggravate inflation.
Cooking prices have already increased by Rs 20-25 per liter compared to February. Logistics costs have increased and the price trend will be unpredictable until the end of the war. Prices increased last year due to Covid situation. Edible oil prices fell slightly in the December quarter after the government lowered import duties, an industry official said.
Current retail prices of various oils per liter
Palm Rs 175
Rice bran Rs 185
Peanut Rs 220
Mixed Rs 190
Sunflower Rs 230
Cooking oil prices have risen by 20-25 rupees a liter since February due to the Russian-Ukrainian military dispute
Indonesia has decided to stop palm oil exports from April 28
India is a major importer of palm oil
Palm oil and its derivatives find use in processed foods, cosmetics and biofuels
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