According to experts, India might face a 300,000-ton cooking oil shortage in May, with the only option to cope with the problem being to reduce consumption. In the last three days, cooking oil costs have risen by Rs. 5-6 per kg. Due to a drop in imports, prices may rise even more in May.
Executives indicated that distributors and merchants are buying edible oil stocks in excess from enterprises, expecting a short- to medium-term scarcity due to Indonesia’s restriction on the export of both crude and refined palm oil.
“The traders’ fraternity is in a frenzy, and distributors are purchasing as much as they can to avoid a shortage.” Because costs are so high right now, some firms are cancelling orders without warning,” said Dhairyashil Patil, head of the All India Distributors Federation.
Fears of a supply bottleneck and a 10-15% price hike have caused trading cycles for palm and crude oil to be disrupted, according to executives.
“In order to assure seamless deliveries, the stock control limit placed on distributors, wholesalers, and retailers of cooking oils needs to be increased,” Sudhakar Desai, head of the Indian Vegetable Oil Producers’ Association, stated.
The Indonesian restriction comes at a time when raw material inflation is already at all-time highs for commodities like wheat, sugar, and coffee. According to observers, prices of edible oils and confectionary, cookies, noodles, soaps, and shampoos have increased since palm and crude oil are significant constituents in these items.
“We are waiting and watching as the news regarding the Indonesian ban changes every day,” said Akshay Modi, managing director of Modi Naturals, which offers luxury edible oils such as Oleev. They first announced a ban on all palm oil, then exempted crude, which was a welcome relief, and now they’ve included it once again.”
According to Akshay, since India imports 65 percent of its edible oil, and sunflower oil is already unavailable owing to the conflict in Ukraine, the situation has grown more critical as a result of Indonesia’s decision.
According to a report by brokerage company Jefferies, packaged goods businesses such as Hindustan Unilever, Godrej Consumer Products, Britannia, and Nestle are concerned about the prohibition.
Despite the fact that distributors, wholesalers, and retailers are buying more cooking oil, several executives in the edible oil industry believe Indonesia’s export prohibition will only last a few weeks.
“We estimate that the present cooking oil scarcity will continue two to three weeks.” “Companies are purchasing merely to keep the supply chain going while waiting for the Indonesian export restriction to be lifted because the current prices are quite expensive,” Sandeep Bajoria, president of the International Sunflower Oil Association, said.”Because the palm fruit is very perishable and Indonesia does not have enough storage,” said Desai of the Indian Vegetable Oil Producers’ Association, “they will have to begin shipments after Ramazan.”
Desai believes that corporations are hesitant to purchase surplus stocks at this time because cooking oil prices in the forward markets may be lower.
In the last three days, cooking oil costs have risen by Rs 5-6 per kg. Due to a drop in imports, prices may rise even more in May. “High costs may lead to a drop in domestic consumption of roughly 2-3 percent,” he noted.
According to experts, India might face a 300,000-ton cooking oil shortage in May, with the only option to cope with the problem being to reduce consumption. “Consumers will have to spend less for a few more days after Ramadan since costs will remain high.” “No one can control the circumstances,” Bajoria remarked.
According to Reuters, Indonesia, which expanded its palm oil export restriction late last week, has locked at least 290,000 tonnes of the edible oil intended for India at ports and oil mills.