Groundnut oil at record high of Rs 700

Unaffordable global prices, low availability for crushers have pushed the prices up.

Groundnut oil prices hit an all-time high at Rs 700 per 10 kg on Tuesday in Mumbai, leaving traders in a dilemma over entering into crude oil import contract for September delivery. The price has jumped over 8 per cent in the last one month.

"Traders are confused whether or not to enter into import contracts for September delivery as they are expecting bumper domestic production in the wake of a normal monsoon. However, order book is full for near months including July and August," said a local trader.

The price of groundnut bolds 60/70, javas 60/70, javas 70/80 and javas 80/90 also hit their respective lifetime highs at Rs 4350, Rs 4150, Rs 4050 and Rs 3950, a quintal respectively.

B V Mehta, executive director of Solvent Extractors' Association of India (SEA) remained categorical on price rise by terming it as a natural phenomenon in case demand supersedes supply.

Last year, the ground production has declined 38 per cent or 30 lakh tonnes because of crop failure in Rayalseema and crop diversion mainly to cotton in Gujarat.

According to government estimates, total crop was reported at 49.83 lakh tonnes in 2006-07 against 79.93 lakh tonnes a year ago.

Trade estimates, too, project the total production lower at 53.5 lakh tonnes in 2006-07 compared with 62.5 lakh tonnes last year.

Indian crude oil importers are in a fix for two reasons. Global prices are ruling higher at an unaffordable $1300 a tonne. In Malaysia, groundnut crude oil prices are quoted at 2440 ringgit, which is way above the affordable level of 2300 ringgit. Availability of groundnut for crushers have gone down in the domestic market due to a spurt in direct consumption and exports.

These factors have impacted the price leading to its lifetime peak, Mehta said and added that unless the government is focusing on increasing the acreage area and thereby produce, prices would keep mounting.

Projecting the crop this year, Mehta said that it was too early to say anything about the behaviour of monsoon, which is solely responsible for any dramatic change in production. As the prices of all commodities including wheat, pulses, cotton etc have gone up severely this year hence, farmers are likely to focus on these commodities also.

Above all, the groundnut production is likely to increase this year, if the country has a normal monsoon, he added.

Groundnut oil for July delivery closed at Rs 711.80 per 10 kgs on NCDEX while groundnut shell ended the session at Rs 532 per 20 kgs on Monday.

The due remained untraded throughout the session.