Mumbai
Edible oil prices are likely to witness a double-digit rise in the next few months compared to January this year, following geopolitical tensions and Indonesia’s decision to ban crude palm oil exports, according to a report.
India Ratings and Research (Ind-Ra) said Indonesia’s decision on April 27 to include Crude Palm Oil (CPO) in the scope of its export ban starting April 28 is likely to affect both supply and prices of edible oils globally.
The move could remove about 2 million tonnes of palm oil supply from the global market every month, which is nearly 50 per cent of the global monthly trade volumes, leading to an increase in substitution demand for other oils and thus a widespread rise in edible oil prices.
The ban puts half of India’s palm oil supply under a cloud while also increasing consumer inflation, Ind-Ra said in the report.
High imports at a continued depreciating rupee will affect the landed prices of other edible oils as well, which is likely to result in overall double-digit growth in prices over January 2022, in the near term, the report said.
Further, it noted that prices of all edible oils have witnessed a significant surge since the Covid outbreak that triggered supply chain disruptions globally.
CPO prices hit a decadal high of over USD 1,200 in 2021 as production continued to lag consumption growth for three consecutive years (2018-19 to 2020-21), leading to a reduction in inventories.
Price rose to an all-time high of USD 1,900 per tonne in March 2022 as the Russia-Ukraine conflict severely impacted the availability of crude sunflower oil, since Ukraine and Russia account for over two-thirds of the global sunflower oil.
