Cooking oil prices spike in India due to Russia-Ukraine crisis

Hyderabad: Prices of cooking oil are on an upwards spiral and have gained up to Rs 25 more per litre. The trade segments attribute the increase in prices to the tightening supplies of sunflower and safflower oils, both called as sun oils, to the Russia-Ukraine war. Also, palm oil imports are getting costlier due to […]

Hyderabad: Prices of cooking oil are on an upwards spiral and have gained up to Rs 25 more per litre. The trade segments attribute the increase in prices to the tightening supplies of sunflower and safflower oils, both called as sun oils, to the Russia-Ukraine war.

Also, palm oil imports are getting costlier due to the internal trade restrictions of Indonesia, the biggest producer of palm oil. On the other hand, soya bean oil is facing pressure to the lower than expected crop of soyabean in South America.

“The prices of cooking oil now have gone by Rs 20-25 a kg. India imports 80 per cent of the total sunflower oil requirements from the Ukraine-Russia region. Shipments have been stopped and they are not getting loaded due to the war situation. The logistics costs have increased,” said Sanjay Kumar Bhurari of Hyderabad-based Tirumala OilChem India, which manufactures and distributes refined rice bran oil, sunflower oil, palm oil and cottonseed oil under the brands Gold Coin and Umbrella. The pricing trend will be unpredictable till the war stops. The prices went up last year due to the Covid situation, he said.

In the retail, palm oil a week ago was sold at Rs 140 a litre while the retailers got it below Rs 125. Now, the retailers are getting it for about Rs 140 and selling at Rs 155 to 158, after adding their margins. Sunflower oil now is being sold at Rs 158 (previously Rs 138). Groundnut oil is selling at Rs 170 compared to about Rs 150 week to ten days ago. Ricebran oil also is now selling around Rs 150, compared to Rs 126 fortnight ago.

For a 5 litre can, the price now is Rs 775 while it was less than Rs 700 a few days ago. For the 15 litre tin, the MRP is revised to Rs 2,375 from Rs 2,025, said a retailer adding that the prices vary with the brand and the cooking oils generally are sold lower than the MRP.

B V Mehta, Executive Director Solvent and Extractors Association of India said prices of palm oil, which is seen as an alternative to sunflower oil, in case the supplies disrupted, too have gone up due to Indonesia’s trade policy. The Indonesian Government has mandated that exporters should sell about 20 per cent of their volumes for a subsidised price within the country to be allowed to export the remaining quantities. This is delaying the palm oil supplies, he said.

This week the Refined Bleached and Deodorised (RBD) palm, the form in which solvents and extractors import, touched record prices of over Rs 1400 per 10 kg at the ports. On the other hand, soyabean crop yield is also lower than expected in South America. “The Russia-Ukraine conflict, lower soyabean crop in the South America and restrictions from Indonesia are the main reasons for the cooking oil prices to rise,” Mehta said.

“There is a silver lining. We have about eight million tonne soyabean uncrushed. We are also harvesting a record mustard crop. Supply will not be a constraint but price will be. The prices will remain at higher levels for some time as we will move in tandem with the international market,” he said adding that the war will increase the demand for alternatives, like palm and soyabean oils.

Edible oil prices have declined slightly in the December quarter after Government lowered import duties. Before this, sunflower oil has witnessed a steep increase in prices, driven by the higher prices of imported crude sunflower oil, surging manufacturing and transportation costs, and less production. The selling prices are determined by the global price trends, foreign currency, import duties, transport and manufacturing costs, said Ravindra Modi, MD of Hyderabad Food Products. The spice, sweets and snacks maker is one of the big users of cooking oil to make its products.

About 70 per cent of India’s sunflower oil consumption is from Southern states of India and Odisha. The imported crude sunflower is refined at Kakinada and Krishnapatnam.