Palm oil prices have hit an eight-month high due to higher imports by China, forcing Indian companies to raise retail prices for the third time in four months.
Palm oil is India's most popular oil, with a 45% share of the edible oil market.
"Soya oil and refined palm oil prices have increased by $40-70 a tonne in the last one month. An immediate price increase of Rs 1-2 a litre on consumer packs will take place," said Angshu Mallick, chief operating officer, Adani Wilmar, which owns India's largest selling cooking oil brand Fortune.
The company crushes a million tonne of soyabean annually and exports 1-1.2 million tonne soya meal, apart from handling 8-10 lakh tonne of refined palm oil. Since November, edible oil companies have raised retail prices by Rs 4-5 a litre owing to the weakening of the rupee. Currently, edible oil consumer pack prices range from Rs 60 to Rs 70 a litre.
"We might see prices remaining at the same level with a likely upward trend," said Cargill India chairman Siraj Chaudhry. In India, Cargill owns edible oil brands NatureFresh, Gemini and Sweekar.
Most edible oil companies expect the volatility in edible oil prices to continue till Holi. "Prices will stabilize in India after Holi as the new mustard crop's availability will peak. Also, the just-cropped palm oil production will begin in May-June in Malaysia and Indonesia which might ease pressure on prices," said an official from Ruchi Soya.
The company, the third largest player in the refined oil business, will be increasing the price of Nutrela Soyumm (soyabean oil) consumer packs by Rs 2 a litre and the Ruchi Gold (palmolein oil ) consumer packs by Rs 1 a litre.
However, the industry is waiting for the new mustard/rapeseed crop production figures. According to second advance estimates, the oil seeds crop for 2011-12 is projected to drop by 6% to 30.53 million tonne owing to uneven rains in the kharif season and low pre-winter rains in the northern region. Analysts expect mustard production to be at 65 lakh tonne compared to 70 lakh tonne in 2011.
"Since 2008, there has been a lot of volatility in the edible oil business, which might continue due to challenges in the supplies of raw material. Even as the country had a bumper soyabean crop, a fall in the US crop size and an expected smaller crop in South America due to drought have impacted Indian edible oil manufacturers," said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil consultancy firm.
According to traders, palm oil prices are supported by the tight supplies and increasing global demand, particularly from China. On Tuesday, crude palm oil futures for delivery in March were firm by 0.35 % to Rs 547.50 per 10 kg on the Multi Commodity Exchange.
Source: economictimes.indiatimes.com