Groundnut dips on low demand, good crop

A bearish phase in the groundnut oil market is set continue following a sluggish demand and expectations of early arrivals of the new crop. Despite a festive season, prices dropped to Rs 40 per 15 kg tin last week.

Saurashtra's groundnut oil millers and traders feel the fall in prices was triggered by the end of purchases for Rakshabandhan and Janmashtami. Stockists also expect the new arrivals to begin by mid-October, which is another reason for the bearish market trend.

"The new crop from Madhya Pradesh and Maharashtra has started arriving in the Gujarat markets. More arrivals are expected by mid-October. Stockists have started clearing the old stock, leading to a decline in prices in the last week," said Chetan Rajani, a Rajkot-based trader. Rajani added that prices went down to Rs 40 per 15 kg and the trend was likely to persist for a month until the Diwali purchases commenced.

Groundnut oil prices are ruling between Rs 1,250 and Rs 1,255 a quintal, after falling by Rs 10 almost each day during the last week. However, prices are not likely to fluctuate much as traders and millers expect demand to remain stable because of the beginning of the Islamic holy month, Ramadan, which is likely to start around mid-September.

"Prices may correct upwards by Rs 10-20 during the following month. The groundnut market will not witness a major fluctuation between September and mid-October," said, Bipin Patel, a Junagadh-based oil miller.