June 16, 2008

 

End-of-season soy shortage drives edible oil prices in India higher 
   
  

A shortage of edible oil stocks in the Indian markets and strong prices overseas buoyed prices in the week ended Friday (June 13, 2008).

 

"There is a shortage of edible oil in the market due to low availability of raw materials. Most of the plants in Madhya Pradesh have been shut due to low availability of soy for crushing," said Prakash Manchare, a trader based in the central Indian province of Madhya Pradesh.

 

Stocks of soy, the main oilseed grown in India, have almost been exhausted as the season is nearly over, he said.

 

In India, sowing of soy starts in June and is harvested around October.

 

This year, soy acreage is expected to rise by up to 10 percent from last year's 8.7 million hectares, as farmers in the provinces of Maharashtra, Gujarat, Madhya Pradesh and some southern provinces switched from crops such as pulses, industry experts said.

 

Many buyers have entered into forward contracts in order to ensure supplies during the festival season that will start in August, boosting demand sharply in recent days, said Manchare.

 

Private imports too have been lower in the last few weeks due to the suspension in soyoil futures, he said.

 

"Previously, private importers used to buy in bulk and hedge their purchases on the futures terminal. After the suspension, they have toned down their purchases," Manchare said.

 

Strong overseas prices of crude palm oil due to record crude oil rates also aided the rise in local edible oil prices.

 

In India, the price of local edible oils is directly affected by international markets as the country imports nearly half of its annual edible oil demand.

 

It buys soyoil from Argentina and Brazil and palm oil from Malaysia and Indonesia.

 

Local refined soyoil was at INR65,500/tonne Friday, up from INR63,800/tonne a week earlier.