Press "Enter" to skip to content

Edible oil makers cut prices by up to Rs 2/litre

Representative Image
span.p-content div[id^=”div-gpt”]{line-height:0;font-size:0}
Leading branded edible oil producers have cut their product prices by up to Rs 2 a litre (around 4 per cent on average) — the second price cut in the last two months — to pass on the decline in the crude palm oil (CPO) to consumers.
Adani Wilmar, the producer of the Fortune brand edible oils, slashed prices by Rs 2 a litre. Other players in the industry, including Cargill India, reduced it by Rs 1 a litre recently. Many companies such as Mother Dairy, which produces the Dhara brand of edible oils, however, have cut distributors’ margins instead of redcuing the maximum retail price (MRP), with room for distributors to offer discounts to retailers and, eventually, to consumers.

The price cut in branded edible oils reflects a similar trend in the international market. Over the past one year, prices of various edible oils, including crude palm oil and refined soya oils, have gone down in the range of 11-20 per cent globally, due to excess supply in the world market.
With the European Union’s decision to suspend CPO as a biofuel, supply from major producers such as Indonesia and Malaysia is now coming to countries like India and China, that have a deficit. A 6-percent depreciation in the rupee over the last one year has restricted the benefit of global price decline to Indian consumers.
“At Adani Wilmar, we are very conscious on passing the benefits to customers whenever the market rates go down. In this case too, we have reduced our edible oil rates by Rs 2 per litre in the last one month. We have to monitor both the rupee-to-dollar and free-on-board (FOB or landed) prices of crude edible oils regularly,” said Anghu Mallick, deputy Chief Executive Officer of Adani Wilmar.
Cargill India had recently cut its product prices by Rs 1 to pass on the decline in CPO prices to consumers.
The benchmark crude palm price for near-month delivery in Bursa Malaysia reported a decline of 6 per cent to trade at MYR 2,029 in the last one month. The decline, however, was a steep 20 per cent in the last one year on account of overproduction in major producing nations.
“We are monitoring movement in the prices of edible oilseeds and oils in the domestic market, before taking decisions regarding price cuts. We will continue to pass on the global price benefit to consumers,” said a senior official of a leading branded edible oil firms.
The market trend in recent weeks, however, shows that prices have started reversing.
Meanwhile, Vedika Narvekar, an analyst with Anand Rathi Shares and Brokers, believes that mustard seed prices may move north on account of low arrivals. “Easing of seasonal supply pressure has gradually restricted the fall in mustard seed prices,” she added.
The situation, however, has turned positive for branded edible oil producers in India, with prices of major oilseeds recovering due to supply shortage.
While soybean remained little changed at Rs 3,877 a quintal, mustard seed prices have jumped 4 per cent to trade at Rs 4,025 a quintal in the last one month.
Similarly, prices of refined soya oil on the benchmark National Commodity & Derivatives Exchange (NCDEX) shot up by 3 per cent to Rs 762 per 10 kg in the last one month.
In fact, the average landed cost of CPO imports has moved marginally up by $10 to $530 a tonne for April, from $520 a tonne for March.
Similarly, the import cost of refined, bleached and de-odorised (RBD) palmolein also moved marginally up to $569 a tonne for April, from $559 for March. However, the spurt in crude and refined palm oil was almost fully compensated by the $19 decline in refined soybean oil to $692 a tonne from $711 tonne in the last one month.
India imports around 3 million tonnes of soybean oil primarily from Argentina, in addition to 9 million tonnes of palm oil mainly from Indonesia and Malaysia combined. B V Mehta, Executive Director of the Solvent Extractors’ Association, said that India has imported about 7.5 million tonnes of vegetable oil (edible and non-edible combined) during the period between November 2018 and April 2019.

Source: Business Standard