Festive buying may buoy edible oils

MARKET OUTLOOK

Edible oil prices are likely to appreciate at least by Re 1 to Rs 1.50 a kg on firm stockists' buying ahead of the festival season. The sector is also overcoming the effect of poor demand during the Shraddh Paksh that ends on October 12.

"Edible oil prices generally go up ahead of the festival season," said Sanjay Aggarwal, CEO and MD of K S Oils, the largest rapeseed oil producer in the country.

Besides growing demand and inadequate supply, edible prices in the domestic market are also determined by the prevailing prices in the Malaysian and Indonesian markets and government levies. Indian markets respond sharply to the landed cost of raw oil imports on domestic ports.

Responding to the development in Bursa Malaysia and Indonesian markets, prices of almost all edible oil in local markets declined approximately by Re 1 last week.

In Mumbai physical markets, groundnut oil fell to Rs 550 per 10 kgs while refined soya oil was at Rs 465.

Refined sunflower oil closed the week at Rs 565 per 10 kgs and refined palmolein managed to end at Rs 458 per 10 kgs.

Expeller mustard oil, however, cooled down to Rs 478 per 10 kgs on Saturday in comparison with Rs 495 last week.

"Although supply of mustard seeds for crushing is abundant, prices are likely to recover next week," said Anil Agrawal, director, Sanwaria Agro Mills.

The per capita consumption of edible oil is at 11 kg, equivalent to a meagre 3 per cent of the total individual expenditure. Of the total consumption of 11 million tonnes, the country imports about 5 million tonnes.

Harvesting of various edible oilseeds are likely to begin in late October or early November. Though bumper crop is expected this year, there will be no respite for consumers for at least next couple of years with the demand for oilseed increasing in energy sector.

During the current kharif season, the total oilseeds output is likely to go up to 155 lakh tonnes compared with 132 lakh tonnes last year.

The sharpest increase is expected to be seen in groundnut, production of which may rise by 14 lakh tonnes to 49 lakh tonnes.