Edible oil prices might cool after Centre imposes stock holding limits

Edible oil prices might cool after Centre imposes stock holding limits


Edible oil and oilseed prices showed a mixed trend in the near-term futures contracts on the NCDEX, a day after the Centre imposed stock holding limits to control the prices, rising since last year.

Traders and market watchers said that while the prices of some items such as soybean seeds for January contracts were trading at a discount of 2-3 per cent from the previous close, it still remained to be seen how long the prices remained low as the supply-demand scenario and the international of oilseeds and edible oils were bullish.

“As India imports around 60 per cent of its annual edible oil requirement, any bullishness in global will have an impact on the domestic prices and how far will the current stock holding limit manage to cool down prices further remains to be seen,” a trader from the leading commodities exchange said. He said the onus now also lies on the states as to how and to what extent they impose the limits.

Just like in the case of pulses, the announcement of stock holding comes at a time when the retail prices of select edible oils has shown a slight moderating trend since the last one-month.

Data sourced from the Department of Consumer Affairs shows that in Delhi prices of packed soybean oil, sunflower oil and palm oil have dropped by Rs 4-7 per litre in the last one month. However, the price of mustard oil has risen by Rs 1 per litre from Rs 189 to 190 per litre.

However, compared to the same period last year, prices are still over 50-60 per cent higher depending upon the oil.

The central government over the weekend imposed stock limits on edible oils and oilseeds until March 31, 2022.

An official release said that the stock limit will be decided by the states based on the available stock and consumption pattern.

However, exporters and importers have been kept outside the purview of stock limits.

The Centre has also directed states to ensure that domestic stocks of edible oils and oilseeds are updated regularly on the portal of the Department of Food and Public Distribution.

“This decision will soften the prices of edible oils in the domestic market. The high prices of edible oil in the international market has a substantial impact on the domestic edible oil prices,” the official statement said.

India’s foodgrain production is likely to touch a record 150.50 million tonnes in the ongoing kharif season (2021-22), while the production of oilseeds is projected to be 23.39 million tonnes, 2.66 per cent lower than last year.

In oilseeds, groundnut production is estimated at 8.25 million tonnes which is 3.50 per cent less than last year, while soybean output is estimated at 12.72 million tonnes, 1.08 per cent less than last year.

The production numbers are according to the first advance estimate of 2021-22 (July-June) crop year that was released a few months back.

The prices of edible oils and pulses have been on fire since the last few months due to a spike in global markets and low supplies.

This has badly impacted household budgets and all eyes are on the coming kharif harvest to provide some succor.

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