Monthly Prices Movement

  • A mixed trend was seen in the Edible Oil complex throughout the month in major markets across the country. Festival demand was keeping the prices higher during the second half of the month.

  • Mustard Oil prices were bullish due to restricted supplies from producing regions amid pick up demand from retailers but Soy Oil prices were pressured by weakness in global market.

  • The demand is likely to be higher which will support the prices in the coming days as festival demand will be in its peak.

Ground Report

  • Edible Oil consumption of India is likely to grow 6.25% in the year to October 2017 and the country's per capita consumption of Edible Oils is rising due to the growth in population and rising income levels.

  • India's Edible Oil imports is expected to surpass all previous records at 15.5 million tonnes during 2015-16 (ending October). India will meet its 55-60% its Edible Oil requirement mainly from Malaysia, Indonesia and Argentina.

  • Soy Oil imports of India fell 17.85% in August compared to a year ago on higher availability of stocks in domestic market.

  • India’s share of soft Oils import increased to 42% from 34% last year while, share of Palm Oil products down to 58% from 66%.

  • Stocks of Edible Oil in ports of India and pipeline are estimated at 2.055 million tons as on September 1 compared to 2.325 million tons a year ago.

  • Overall import of Vegetable Oils of India during first ten months of the current Oil year 2015-16 (Nov-Aug) stood at 12.165 million tons and during the month of August imports dropped 8 percent to 1.262 million tons due to high stock. Overall Vegetable Oil import of India is estimated at 14.5 million tons, similar to last year.

  • The Solvent Extractors' Association (SEA) stated that India's import of Refined Oil (refined, bleached and diodised or RBD Palmolein) at 2.19 million tons during the period between Nov '15 and Aug '16 and Vegetable Oil (Refined and Crude Oil) imports during the period jumped marginally by 4 per cent to 12.04 million tons.

  • India's Sunflower Oil purchases climbed 17% to 120,000 tons and Canola Oil purchases were seen at 43,000 tons in August, according to a Bloomberg survey.

  • Edible Oil refiners in India is facing a surge of imports of refined Oil over the last few months, reducing their capacity utilization to 30-40% from 55-60% a year ago.

  • Indian supply of Vegetable Oil expected to rise this season due to higher sowing acreage and favorable weather condition but the higher imports is likely to affect the industry adversely.

Policies

  • Indian government lowered the import duty on Crude Palm Oil to 7.5 percent from 12.5 percent, and duty on Refined Palm Oil has been reduced to 15 percent from 20 percent. The import tax reduction is to check the rise in prices during the festival season and to ensure enough availability. This has disappointed Vegetable Oil industry officials in the country since it will put pressure on the local Oilseed farmers who are about to begin sowing of the new crop.

  • Indian government extended stock limit on Oilseed for one year, which was ending on September 30, 2016 to keep prices under control. India is dependent on import of Edible Oils as the domestic production is lower than the demand.

  • The import tariff value for Crude Soybean Oil has been reduced by India to $817 per ton for the second half of September against $$848 a ton earlier. Government fixes the tariff value every fortnight.

Global

  • China's Soybean Oil imports are estimated at 650,000 tons in 2016/17 marketing year and Rapeseed Oil imports at 700,000 tons, according to USDA.

  • Peanut Oil imports of China are estimated at 130,000 tons in MY16/17 from the estimate of 120,000 tons in MY15/16.

  • United States Department of Agriculture (USDA) said that China’s Vegetable Oil imports in 2015/16 marketing year declined and continued to be flat in MY16/17.

  • Sunflower Oil export of Ukraine hit new record high of 4.479 million metric tons during 2015/16 Oil season (September-August), an increase of 15.74 percent. Exports in August was down at 0.258 million metric tons against 0.352 million metric tons a month early.

  • Import of Sunflower Oil from Ukraine was mainly by European Union, India, China and Turkey which imported 32 percent, 31.6%, 14% and 4% of total exports respectively during the 2015/16 Oil season. Currently Ukrainian Sunflower Oil is exported to more than 200 countries in the world.

  • Ukraine produced 193,000 tons of Sunflower Oil during the month of July which is down significantly by 32.29% as compared to 285,000 tons a year early, ministry informed.

Outlook

  • The reduction in import tax will put a burden on local Oilseed prices as India meets more than half its Cooking Oil requirements through imports. With imports expected to surpass all previous records at 15.5 million tonnes during 2015-16 (ending October), India will meet its 55-60% its Edible Oil requirement mainly from Malaysia, Indonesia and Argentina.

  • Per capita consumption of Edible Oils has been rising due to the growth in population and rising income levels. India's Edible Oil consumption likely to grow 6.25% in the year to October 2017.

  • A narrowing spread between Palm and rival Oilseed Soy has shifted some demand to Soy, dampening Palm shipments in recent weeks. Consumers tend to prefer Soy Oil for cooking to Palm and both compete for a share of the global Edible Oils market.

  • Looking ahead, we expect demand to moderate with Chinese Palm Oil stock levels stabilizing, while high spot prices likely to increase preference for Soybean Oil in markets such as India and Pakistan.

  • Prices may face stiff competition in long-term and volatility may rise as price gap with rival Sunflower Oil is nearly at par, as supply for both oils likely to rise from their origins.

  • Demand for Navratri and Diwali is expected to pick up from early days of October and so the trend is likely to continue in Edible Oils till winter.

  • Demand for Mustard Oil expected to improve after Diwali, when winter sets in and demand from Palm shifts to other Vegetable Oil and Mustard Oil is seen most favored one.

  • India's imports of Refined Edible Oil likely to double to set a new record in the current oil year (Nov '15-Oct '16) due to better realization than import of CPO.

  • As the supply of Groundnut has been gradually increasing at a time when demand has is down, Groundnut Oil prices have gone down by 13% in retail and 18% in wholesale markets in the last 20 days. Groundnut Oil prices had touched record high in August due to festival demand and scarcity of Groundnut for crushing.

  • Supply of Groundnut will gradually increase with the arrival of new crop soon, which may decrease Groundnut Oil prices to Rs 1,000 per 10 kg in wholesale market in next one month.

  • Indian government extended stock limit on Oilseed for one year, which was ending on September 30, 2016 to keep prices under control. India is dependent on import of Edible Oils as the domestic production is lower than the demand.

  • Edible Oil demand likely to fall after Diwali as no near-term festival or marriage season follows. Supply for Vegetable Oil will rise in coming months on expectation of big Soy crop from US and Sunflower in Ukraine.

  • Market is in wait and watch mode as all bad news related to Palm Oil has come altogether, which is pressuring prices, whereas currently demand is sluggish in spot market, but likely to pickup in coming days and support prices.

  • Edible Oil is not contributing to inflation. However, if the government was so much concerned, it should have reduced import duty only on CPO and not on refined Palm Oil.

  • Edible Oil prices have been trading lower at the major markets across the country since last few days amid news on cut on import taxes on Edible Oil as part of efforts to curb food inflation.

  • Indian government lowered the import duty on CPO from 12.5% to 7.5% and on refined oil from 20% to 10%, thus narrowing the duty differential to a mere 2.5%.

image