Edible oil (edible oil) consumption in India is increasing at a rate of about 5 percent every year. Due to the large gap in demand and supply and the shift of Indian farmers to another crop, edible oil shortage is happening. In such a situation, to meet the shortage of edible oil, now the dependence on imports has increased. There is also the maximum import of palm oil. At the same time, production has decreased in the exporting countries of palm oil due to labor shortage, bad weather. In such a situation, palm oil prices are increasing due to lack of supply according to demand during the festive season. Expert says that it will accelerate further.
Price can go up to Rs 900
The crude palm oil commodity exchange is currently priced at Rs 820 on NCDEX. Talking about a few months ago, on 27 August it was at the price of Rs 760 on NCdex. That is, it has given a return of about 7 percent in just two months. Since the removal of the lockdown imposed due to the Corona epidemic, its demand has increased rapidly now. In such a situation, there is a better chance of profit for investors. According to Kedia Commodity Director Ajay Kedia, by the end of this year, it can show a level of Rs 900 as well.
Production falling due to labor shortage
According to Angel Broking Deputy Vice President Anuj Gupta, due to corona epidemic and bad weather, its supply has been badly affected. The largest production of palm oil is in Indonesia and Malaysia. Labor shortage is occurring in Malaysia due to Corona epidemic, which has affected production. One reason for the labor shortage is that foreign workers are not renewing. Malaysian palm oil production is expected to fall further. Already 25% production has been reduced this time due to lockdown.
Weather has spoiled the situation
Ajay Kedia says that the production of Malaysian palm oil has reduced this time and now in the Sabah region (Malaysia), production is decreasing by about 50 percent every month. According to Sabah’s plantation owners, production of palm oil can be reduced by up to 3 lakh tonnes every month under conditional movement control orders. There is an annual production of 5 million tonnes of palm oil in Sabah and one-fourth of Malaysia’s total output is produced here. Its output has been affected due to La Nina in Indonesia and Malaysia and its effect is expected to remain till the end of this year.
Reduced consumption due to lockdown
Palm oil consumption in the country had fallen by 40 per cent due to the lockdown and due to which its imports had come down by 25 per cent, which was the lowest in the last decade. Till 2015-16, there was an increase of 12 per cent in its imports every year. India imports 96 per cent of its requirement from palm oil from Indonesia and Malaysia. Whenever the price of cooking oil picks up, the central government caters to the low and middle class cooking oil through RBD (refined, bleached and deodorized) palm oil purchase.
Imports falling since July
Apart from India palm oil, soybean, sunflower, mustard and other types of soft oils are imported. Palm oil accounted for about 62 per cent of the total imported oils in September. 643994 tonnes of palm oil were imported in September, which is lower than the previous month of August. In August, 734351 tonnes of palm oil were imported. Palm oil is imported as RBD palmoline, CPO, crude olein and CPKO. The RBD palmolein was placed on the Restricted Import List on 8 January 2020 and since then its imports had declined. Although its imports increased in July, but then again it declined. These figures belong to SEA.
60% used as unbranded cooking oil
Palm oil is used in many ways in India. In India, 60 percent of palm oil is used as unbranded cooking oil, 30 percent is in branded cooking oil and foods. In addition, the remaining 10 percent of palm oil is used industrially. India is the largest palm oil importer in the world and 20 percent of the imports take place here. India consumes around 30-32 lakh metric tons of palm oil every year. Palm oil consumption is increasing every year as the packaged food industry prefers it and its sales are higher as compared to other edible oils in retail shopping.