March 1: After displaying stability for nearly six years, edible oil prices are expected to go up by 10-15 per cent this year.The recent ban imposed by Indonesia on exports of palmolien coupled with a low domestic production of oilseeds are the major reasons for the price hike. A depreciating rupee makes the situation worse. Says S K Chadha, chief executive, Vanaspati Manufacturers Association (VMA) "The price of edible oils has already gone up by 8 per cent in January in several markets including Delhi and Mumbai".
Estimates collected by the VMA shows that the edible oil prices in January 1998 over the last month for the Delhi market for mustard expeller went up by 6.8 per cent per quintal, sesame mill increased by 3.2 per cent per quintal, soyabean and cottonseed increased by 8.2 per cent while vanaspati rose by 2.8 per cent.
For Mumbai, estimates prepared by the Centre for Monitoring Indian Economy (CMIE) indicate that the prices of edible oils increased by more than 10 per cent in January 1998over their levels in the previous month. In the Mumbai market prices moved up from Rs 338 in the first week of December 1997 to Rs 361 per 10 kg by the end of January 1998.
In the Chennai market, they increased from Rs 335 as on December 1, 1997 to Rs 395 on December 24, 1997. However, they declined to Rs 368 per kg at the end of January 1998. Palmolien oil prices in Mumbai market moved up from Rs 275 to Rs 303 per 10 kg. The edible oil price rise for Mumbai and Chennai is derived from a weighted price index of all edible oils including groundnut, mustard, sesame, soyabean, cottonseed and vanaspati.
According to the VMA, the price rise is a direct fall-out of certain domestic and international factors. On the domestic front, there is a decline in oilseed production, especially of rapeseed, mustard and soyabean due to untimely rainfall followed by severe cold wave conditions. Cottonseed production also declined by 4.75 lakh tonnes.
These factors are likely to create shortage resulting in rise in pricesof edible oils. On the international scene as well, a tightness in world market for edible oils is being indicated.
A 3-month ban on export of palm oil and palmolien has been officially imposed in Indonesia to preserve domestic supply at stable prices. The export restrictions are a reaction to the sharp decline in Indonesian palm oil stocks to 0.5 million tonnes in late December from 0.83 million tonnes a year.
`Oil World' magazine has reported that Indonesian palm oil exports are expected to fall by 1.5 million tonnes during January-June 1998 from 1.3 million tonnes last year. Malaysian palm oil production in 1998 is likely to be lower than the previous year.
`Oil World' predicts a sharp rise in palm oil prices in the world market especially in the next 3-4 months. The VMA expects that the coming months will test the government's policy of providing edible oils at reasonable prices.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
