“From Diwali, we can expect edible oil prices to settle back from the current levels. Large stock in the producing countries and the harvest of the new crop of groundnut, cotton and soya bean in the domestic market may lead to this drop,” said Sanjeev Asthana, CEO at Ruchi Soya Industries.
However, the progress of monsoon rain and other global factors like Chinese buying and diversion of palm oil for biofuel in Indonesia will also need to be watched, he said.
With palm oil accounting for over 60 per cent of the 15 million tonne annual vegetable oils import in India, a drop in global prices will impact the domestic prices of all edible oils, industry executives said.
BV Mehta, executive director of Solvent Extractors Association of India, said the kharif planting of oil seeds has increased by 15 per cent to 20 per cent in India and they expect domestic edible oil production to also rise. “In next two months, we expect a higher crop than the previous year. Good water reserve will also benefit the rabi oil seed planting. All these factors will put pressure on prices and by Diwali, prices will start falling,” he said.
Demand for edible oil increases during the festive season where it is used for preparing food and sweets.
Currently, palm oil prices in the wholesale market are 15 per cent higher than the pre-lockdown level at Rs 83 a kg while soya bean is over 12 per cent higher at Rs 87 a kg, said Sandeep Bajoria, chief executive officer of oil consultancy firm Sunvin Group.
“With the rupee strengthening to Rs 74.2 to a dollar and an expected good stock of palm oil, we can expect prices to remain steady and move slightly downward in the third quarter,” he said.
After a big rally in palm prices in the past few months, markets can consolidate and we will have to carefully follow production growth in Malaysia and Indonesia, said Sudhakar Desai, president of Indian Vegetable Oil Producers Association. He said palm oil imports for September- October period will be 0.7 million tonnes and for October-December 0.6-0.65 million tonnes.