Palm oil is a major ingredient in restaurants and packaged foods, sectors that have taken a hit in the lockdowns induced by the second Covid-19 wave.
New Delhi: With consumer demand dropping, particularly as the restaurant sector has taken a hit in the lockdowns induced by the second Covid-19 wave, the prices of palm oil may finally witness a decline in India.
Palm oil is vital to a number of sectors in the country as its usage is diverse, from cooking oil, pizza dough, soap, shampoo, lipstick, chocolate and even biodiesel.
Palm oil prices hit a record high in the first half of this year but edible oil traders say they are witnessing a decline in demand, which could hit prices and imports.
Its imports were expected to stand at an average of 8,50,000 metric tonnes a month in May and June but now industry officials estimate imports could come down to around 6,50,000 metric tonnes per month.
“The price of palm oil might decrease for the next few months until the country completely recovers from Covid and lockdown. This is because major consumption of palm oil is in the commercial sector in food or other products, demands of which have crashed substantially due to lockdown. This, in turn, will deflate the prices,” said Rahul Chauhan, the agro commodity analyst at Igrain India, a leading commodity market research firm.
Chauhan said the months preceding the second Covid-19 wave saw palm oil prices peak in the country.
“The prices of palm oil have reached their highest levels in the last few months and will not go further above even if the country opens up,” Chauhan added. “Malaysian palm oil saw a never before peak of 4,000-4,500 ringgits/metric tonne (between Rs 70,000-80,000/ metric tonne) from the average of 2,000-2,500 ringgits/metric tonne (Rs 35,000-40,000/metric tonne).”
As Vanaspati, it is the most common cooking medium in the commercial food industry. The total domestic consumption market share for palm, soybean, and sunflower oil stands at 42 per cent, 22 per cent, and 12 per cent respectively.
According to the United States Department of Agriculture (USDA), almost 65 per cent of the total demand for edible oil in India (food and industrial use) is met through imports.