1. Commodity News

Edible Oil Demand Remains Stable Amid Reducing Supply Disruptions

Abhijeet Banerjee
Abhijeet Banerjee

Edible oil prices had shot up just after the lockdown announcement as supply disruption situation emerged resulting in temporary supply constraints. There were fears regarding the fate of edible oil markets or Agricultural commodities, on the whole. But now there is clarity that items which are consumed daily will be always be in demand. As a result markets have not fallen much from March end levels, after supply disruptions reduced. Overall, cooking oil availability has improved in last few weeks which have limited the gains. However prices had not fallen much – in fact they are more or less stable to firm in present firm, supported by Ramzan season demand.  As per sources most oil plants, especially mustard oil plants are operating at full capacity. 

Palm oil has posted decent gains as export demand from Malaysia and Indonesia has improved due to ongoing Ramzan season demand. In recent weeks, palm oil has registered higher price appreciation than its closes rival i.e. Soybean oil. Soybean oil found some difficulty in moving upwards as soybean failed to maintain firm levels. Soybean could not gain much in recent weeks, (overall the price trend was marginally up), since sowing operations were reportedly progressing satisfactorily, thereby raising future supply estimates. Mustard seed posted decent gains last this week as spot demand was firm against lower arrivals and delay in growers’ sale of new season’s harvest, due to lockdown situation.  

Harvest is over for Mustard and most of the crop lies with the farmers, and at present, tendency to sell is lower since spot prices are below the MSP or the Minimum Support price. Stable demand in mustard oil also kept buying interest in retail markets of Mustard. Procurement from the Government agencies continues which also keeps markets of mustard supported these days. Procurement of mustard shall continue in coming days and growers are still not in mood to sell their produce in bulk hence traders and commodity experts do not expect any significant fall in prices during the terminal week of this month.  

Ramzan season ends on the 25th which would mean reduction in demand of edible oils to some extent. However supply constraints shall persist as there will not be any foreign shipment on the ports for the coming week. At the same time demand for oilseed is quite healthy in present term. Also, foreign edible oil markets are often maintaining upward trend, especially in USA, China or Malaysia. The corona problems in China are reducing and Chinese are back to resuming trading operations gradually therefore demand from China shall be seen as a positive factor for exporters of edible oil exporters of US and Malaysia.  As a result Indian markets will also be seen trading with positive note in coming days.  

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