Oil Price in India: A Diwali Surprise for Consumers

Diwali, the festival of lights, brings joy and celebration to Indian households. This year, in addition to the customary festivities, the Indian populace received an unexpected gift – a drop in cooking oil prices. Notably, all edible oils, except soybean oil, witnessed a decline in the Indian oil market over the past week. Market insiders attribute this shift to unfavorable weather conditions in Brazil, causing a one percent rise in soybean de-oiled cake (DOC) prices in Chicago last Saturday. Prices of soybean in international markets also strengthened, contributing to the positive trend in soybean oil prices.

A Surge in Wholesale Prices

Reports indicate that last week, biodiesel manufacturers at Kandla Port secured sunflower oil at INR 76.50 per liter under the December contract. This highly affordable “king of oils” in the market did not translate into immediate relief for consumers. Whether you are a retailer, wholesaler, importer, or consumer, everyone is grappling with their share of challenges in the edible oil market. Despite the drop in wholesale prices, it seems that common people are not experiencing a significant reduction in cooking oil prices.

Increasing Demand

Consumers are grappling with soaring prices, as mustard oil is selling at around INR 30 per liter, peanut oil at INR 50-70 per liter, and sunflower oil at around INR 30 per liter. Interestingly, manufacturers of sweets and snacks, which predominantly use palmolein oil during winters, are not demanding palmolein oil. In winter, the demand for soybean and sunflower oil goes up. The business insiders suggest that the edible oil market is no longer in the same situation as before when efforts were made to bridge the gap caused by the shortage of Rabi sesame. While there is a slight increase in production during Kharif, it doesn’t seem to make much difference because the rising population has also increased demand. In essence, India has become dependent on foreign markets and imports for nearly 55 percent of its edible oil requirements. This makes it unlikely for domestic production to significantly impact the prices.

The State of Edible Oils

Currently, the domestic edible oil market is in a delicate state due to the pressure exerted by the inexpensive imported oils. These imported oils are difficult to compete with for domestic oils. In this scenario, a decline in the prices of imported oils adds pressure to the domestic oils. The stock of soft oil at Kandla Port is already low, and it appears that the import of soft oils will be scarce in November. With the upcoming festive and wedding seasons, as well as the winter, there is an increasing demand for soft oils. Hence, it is essential for edible oil organizations to communicate their concerns to the government regarding the supply of soft oils in the coming days.

Current Prices

Comparing prices from the previous weekend, wholesale mustard seed prices fell by INR 95, closing at INR 5,700-5,750 per quintal. Mustard Dadri oil prices fell by INR 375, closing at INR 10,500 per quintal. Meanwhile, the prices of refined and crude groundnut oil displayed a loss of INR 50 each, closing at INR 1,785-1,880 and INR 1,785-1,895 per tin (15 kilograms), respectively. Similarly, soybean seed and loose prices increased by INR 35 each, closing at INR 5,085-5,185 and INR 4,885-4,985 per quintal, respectively. The prices of soybean in Delhi, Indore, and Deogam oils showed marginal improvements of INR 15, INR 10, and INR 25, respectively, closing at INR 10,050, INR 9,895, and INR 8,375 per quintal, respectively. The peanut oil prices also witnessed a decrease due to weakening demand during the winter season, with groundnut oil (CPKO) dropping by INR 175, closing at INR 7,725 per quintal, palmolein Delhi falling by INR 300, closing at INR 9,000 per quintal, and palmolein ex Kandla oil falling by INR 175, closing at INR 8,175 per quintal. Consequently, the Binola oil prices also saw a reduction of INR 200, closing at INR 8,725 per quintal.

In conclusion, the fluctuations in the Indian edible oil market are complex, driven by both international and domestic factors. Consumers can only hope for relief in cooking oil prices as they continue to grapple with the ongoing challenges of rising food costs.