With higher availability of raw material for crushing and weak demand, groundnut oil has been trading at four year low in recent times. Also, poor export demand for groundnut has further resulted in drastic downfall in groundnut oil prices this year.
Since December last year groundnut oil prices have been on downhill run due to higher crushing following bumper production of groundnut which was almost three times compared to last year.
In January 2013, refined groundnut oil was traded at Rs 2,250 for a 15 kg tin, an all time high price, but currently the price of same was ruling around Rs 1,340-1,350, down by 40% from a record high. Current price levels in groundnut oil was last seen in January 2010.
More From This Section
Suresh Kaneria, managing director of Kaneria Oil Industries said, “Main reason for downfall in groundnut oil prices is due to higher availability of groundnut for crushing. Most of the stock in groundnut has been diverted to mills as export of the commodity has been nominal this year.”
During November and December last year there was good demand of bulk buyers. At that time over 250 tonnes of groundnut oil was traded per day, but after that retail demand decreased and till date buying activity has been not as per requirement. At presently, nearly 50-70 tonnes of groundnut oil is being traded every day.
According to edible oil industry sources, due to higher crushing activity, groundnut oil production is likely to increase to 300,000 tonnes as compared to last three years’ average production of 200,000 tonnes.
Samir Shah, president of Saurashtra Oil Mills Association (SOMA) said, “Gujarat have major share in groundnut oil production. Out of total production, the state has produced more than 40-45% groundnut oil, while Andhra Pradesh share is about 15-20 percent.”
On the other hand, export demand of groundnut from India fell mainly because of weak demand from China.
Vikram Duvani, managing director, Rachana Seeds Industries from Junagadh said, “Overall demand in international market for groundnut is very poor. India’s export has declined because of weak demand from China.”
As per Indian Oilseed and Produce Export Promotion Council (IOPEPC) data, during April-September 2013, India exported 189,867 tonnes groundnut. In the corresponding period previous year, India had exported 535,670 tonnes groundnut.
According to Duvani, this year India’s groundnut export could be around 450,000 tonnes.
The IOPEPC has estimated kharif groundnut production for this year at 4.91 million tonnes from five states - Gujarat, Rajasthan, Andhra Pradesh, Karnataka and Tamil Nadu - which account for close to 90% of total output in the country.
This is higher by 2.1 million tonnes as compared to kharif 2012, when the crop was only 2.81 million tonnes in these states, owing to monsoon failure.
The, Solvent Extractors' Association of India recently issued a kharif crop estimate of the Central Organization for Oil Industry & Trade. The report stated kharif groundnut production for 2013-14 would be 4.71 million tonnes, against last year's 2.62 million tonnes.