February 18, 2008

 

India edible oil prices mixed on global cues, rapeseed output

 

 

India's edible oil prices were mixed in the week to Friday (February 15), taking cues from global markets and fears of a fall in this year's rapeseed production, traders and market participants said.

 

However, adequate stocks with traders and a sharp rise in imports prevented any big jump in prices.

 

The local groundnut oil price was INR73,500/ton Friday, up from INR72,000/ton, while crude palm oil was at INR50,200/ton, down from INR50,800/tonne.

 

Refined, bleached and deodorized palm olein was INR54,200/ton, down from INR55,200/ton a week earlier, while refined soyoil was INR59,400/ton, up from INR59,300/ton.

 

"Strong global crude palm oil and soyoil prices pulled up local markets, as India is one of the largest edible oil importers," Rajini Panicker, head of research at MF Global (India), said.

 

She said fears of a fall in India's 2008 rapeseed production because of a drop in area and unfavourable weather were also keeping sentiment upbeat in edible oils.

 

India's edible oil prices are directly affected by global markets as the country imports more than half of its annual demand of about 12 million tonnes.

 

The country imports palm oil from Malaysia and Indonesia and soyoil from Brazil and Argentina.

 

Though edible oil prices have climbed sharply in the international markets, imports haven't fallen, as demand continues to be strong.

 

January edible oil imports surged 46 percent on year to 457,601 tonnes, according to the latest government estimates.

 

"Strong demand in the country led to higher imports during the period despite high prices. With (the) population rising steadily, India's edible oil demand also rises by 700,000 tonnes every year," B.V. Mehta, executive director of Solvent Extractors Association of India, said.

 

In the marketing year started November, edible oil imports as of January totalled 1.08 million tonnes, up from 932,214 tonnes a year ago, the data showed. Palm oil imports rose 13 percent on year to 990,453 tonnes, and soyoil imports declined 53 percent to 91,250 tonnes.

 

Fears of a drop in winter-sown oilseeds, mainly rapeseed, because of cold weather and a fall in area also boosted prices in the week.

 

The government estimates rapeseed output at 7.07 million tonnes in the year ending June 2008, down from 7.44 million tonnes the previous year.

 

However, it estimates total oilseed output at 27.16 million tonnes in the year, up from 24.29 million tonnes last year.

 

It forecasts annual soy output at 9.45 million tonnes, compared with 8.85 million tonnes a year ago, while groundnut production is likely to surge to 7.29 million tonnes from 4.86 million tonnes last year.