A fall in the acreage in the kharif season has raised concerns of a possible dip in the groundnut production. This could make the availability of edible oil scarce. Miller sources hint at a possible rise in the oil prices after February.
Market participants in Gujarat fear a drop in the production by 15 per cent to 1.2-1.3 million tonnes, against the last year's 1.6 million tonnes. Lesser availability of groundnut for crushing may cause an escalation of the oil prices.
"The production is likely to come down by 10-15 per cent, as sowing has dropped. More, bad weather in the area may affect production," said Rajesh Bheda, president, Indian Oilseed and Produce Export Promotion Council (IOPEPC).
According to the data by the department of agriculture, Gujarat government, sowing was at 1.43 million hectares on September 12, lower from the 1.67 million hectares in the same period last year.
The sowing on September 15 stands at 4.32 million hectares, down six per cent from the 4.93 million hectares last year.
According to the industry estimates, about 40 per cent of the production is used for crushing. Last year, this volume was at 30-32 per cent, as most of the stock was used for consumption as peanuts and its products.
Meanwhile, the millers anticipate a rise in the oil prices due to a possible fall in the acreage.
"Lower acreage will translate into lower production and would affect oil prices in the long term. Prices may cross Rs 2,000 per 15 kg tin in the next oil year," said Samir Shah, managing director of Rajmoti Oil Industry Rajkot.
The oil prices are already high and ruling in the range of Rs 1,665-1,670 per tin.
It is to be mentioned that oil prices had touched an all-time high of Rs 1,720 per 15 kg tin in August due to the shortage of groundnut.
"Last year, groundnut production had increased in both the kharif and rabi seasons. But most of the stock was consumed for peanuts and its processed products, hence oil millers had to face a shortage of groundnut for crushing," Shah informed.
Demand from the exports and peanut consumption is believed to decide the future price trend of the groundnut oil in India. "The oil price trend will depend on the export of the groundnut and the demand for peanuts. If exports increase, then the price of groundnut will rise," said Suresh Kaneriya of Kaneriya Oil Mills.
Adding further, he said, "The oil prices will start increasing after February. At present, the new crop is about to come, so it will hold back the oil prices."
The data provided by IOPEPC suggests the exports of groundnuts during April-March increased to 418,000 from 340,000 tonnes recorded in 2009-10, showing a growth of 23.02 per cent.
In value terms, the exports recorded an impressive growth of 47.26 per cent, reaching a level of Rs 2,099 crores during April-March from Rs 1,425.93 crore during the previous year.
However, experts anticipate the yield to improve in groundnut, reducing the chances of a fall in the production. "Acreage has declined, but the yield may be higher due to early sowing in kharif season at some parts. The production may remain same as last year," said B V Mehta, executive director, Solvent Extractor of India (SEA).
Echoing similar sentiments, Govind Patel, former president of SEA, and edible oil expert, informed that due to early sowing and good weather during the kharif season, the production would be almost the same as last year. "This year about 35 to 40 per cent of the total sowing was early sowing.
