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Edible oil prices rise 15% in a month

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Kolkata: Cooking oil prices have risen up to 15% in the last one month, potentially causing worry for the Modi government to rein in food inflation as it starts its third term.Companies like Adani Wilmar, Emami Agrotech, and Sunvin Group said while disruption in soyabean oil supplies from Argentina and Brazil is driving prices higher, mustard oil prices have risen as National Agricultural Cooperative Marketing Federation of India (NAFED) and Haryana State Co-operative Supply and Marketing Federation Ltd (HAFED) have purchased large quantities of mustard seeds.

The current scenario is leading mustard farmers to delay selling their harvest in anticipation of a further rise in prices even though mustard seed prices have hit the Minimum Support Price (MSP) of ₹5,650 per quintal.

“I would not say further big rally is unlikely, but the market is expected to stay firm,” said Sudhakar Desai, president of Indian Vegetable Oil Producers’ Association and CEO of Emami Agrotech.

Edible Oil Prices Rise 15% in a MonthAgencies

Trade sources said soyabean oil supplies have been impacted due to workers’ protest in Argentina, resulting in lower crushing of soyabean this season. The Argentine Oilseed Crushers Union had given a strike call protesting the proposed economic law reforms which talked about changing wage taxes that would affect crushers.

Floods in Brazil have further dented soyabean oil production. Soyabean losses related to recent floods in Brazil’s southernmost state of Rio Grande do Sul were estimated at 2.71 million metric tons, crop agency Emater said on June 5, according to international media reports.

“There is a supply chain problem for soyabean oil. In April, if a shipment of soyabean oil was coming from Argentina via Brazil, it would have contained around 40,000 tonnes of soyabean. But in May, it dwindled to 30,000-32,000 tonnes. This has resulted in a tightening of supply of soyabean oil in May resulting in a price hike of ₹3-4 per litre at the retail level,” said Angshu Mallick, managing director of Adani Wilmar.

Added Sandeep Bajoria, CEO of Sunvin Group, a Mumbai-based leading oil trading company, “China has also bought huge quantities of soyabean oil. That too has impacted the price of the soft oil.”

India imports around 3 million tonnes of soyabean oil annually to meet domestic demand.

“There is very little supply of sunflower oil from Russia and Ukraine as this is the off-season. However, high temperatures in these regions have impacted the end-season crop and are likely to impact the upcoming crop. That has impacted the sentiment of sunflower oil and pushed up prices. Prices of sunflower oil are already up by 6.5%,” Bajoria said. India imports 2.5-3 million tonnes of sunflower oil annually.

Desai said the biggest rally has been in mustard oil prices. “It has gone up by 15%. Prices will remain firm in the near term and there is no doubt about it.” He added that the palm oil supply situation is also tight.

This year, the domestic industry is expecting a bumper Rabi mustard crop as the acreage has increased to 10.04 million hectares from 7.30 million hectares. Since NAFED and HAFED are procuring mustard seeds heavily, prices of mustard oil have shot up in the domestic market, said Mallick at Adani Wilmar.

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