``Prices of mustard and groundnut will increase on fresh demand during festivals and the surge in prices would be further aided by reports of fall in acreage under these crops during the kharif season,'' Manshukh Bhai Patel of Velani Traders said.

However, prices of other oils like rbd palmolein, soyabean and sunflower were likely to remain stable as a large chunk of the demand was being met through imports from the international markets, he said.

Edible oil prices have shot up more than 20 per cent since early August following rise in Malaysian palmolein prices.

Private traders are estimated to have contracted about 10 lakh tonnes of various edible oils anticipating an additional demand of 25 per cent during September and October, the main festive seasonin the country, industry sources said.

State Trading Corporation (STC) has already contracted for imports of about 92,000 tonnes of oil for supply through the public distribution system (PDS).

``Demand for groundnut and mustard oil could outstrip supply during the festive season and lead to increase in their prices,'' SN Aggarwal said.

Domestic prices of various edible oils have shown sharp increase during the past one month following pick-up in prices of Malaysian palmolein and reports of shortfall in kharif oilseed output.

Other factors that could aid the upward trend in prices are reports of damage to soyabean crop in the United States which is a major supplier of soyabean oil in the world and a possible agreement between China and Malaysia on purchase of about eight lakh tonnes of oil, industry sources said.

``Moreover, the industry is currently witnessing a corrective phase where the prices had dipped to low levels and is now regaining the levels that existed before,'' Vanaspati Manufacturers'Association (VMA) executive director SK Chadha said.

He said prices could remain firm till November-December as demands would increase during festivals like Dussehra and Diwali.

Taking advantage of the dip in rbd palmolein prices, hydrogenated oil (vanaspati) manufacturers had increased production during the last few months and overall production during the current year was set to cross one million tonnes, he said.

``Prices of vanaspati could rise in the coming days as it is considered the best edible oil for making of sweets during the festive season,'' Chadha said.

As groundnut and mustard oils were consumed only in select regions, any spurt in prices should not cause undue concern to the government, Patel said.

``As these oils are specialised products, consumers should be willing to pay more,'' he said.

Patel said any shortfall in mustard and groundnut oils would be easily bridged by adequate imports of soft oils like sunflower and soyabean or palmolein.

While the kharif groundut has been hitby inadequate rains in parts of Gujarat and Maharashtra, a shortall of about 10 lakh hectares under soyabean in Madhya Pradesh has been reported.

Patel said the indiscreet import policy of the government had also forced farmers to shift from crops like soyabean to more profitable cash crops leaving the country vulnerable to imports to bridge the supply- demand gap of over 15 lakh tonnes of edible oils per annum.

Concerned over the recent rise in prices of edible oil, specially in the packed segment, government has asked STC to speed up the delivery of oil contracted by it for the months of August and September.