According to industry sources, domestic edible oil prices are expected to rise by 10% to 15% in the short term, after Indonesia, the world's top producer and exporter of palm oil, placed a ban on its export on April 28.
The Ukraine-Russia war has already harmed sunflower oil supply in India, putting strain on household finances.
Indonesian President Joko Widodo said on Friday that all cooking oil and raw material exports would be suspended from April 28 until further notice. The decision was made in response to a chronic scarcity of edible oil and increasing costs in the Southeast Asian country.
In Indonesia, the average selling price of cooking oil is 26,436 rupiahs ($1.84) per litre, up more than 40% this year. Prices in several areas have virtually doubled in the last month.
Across 240 million tonne of edible oil is consumed annually around the world, with 80 million tonne (34 percent) being palm oil.
According to Sandeep Bajoria, CEO of Sunvin Group, a Mumbai-based vegetable oil trading and advisory firm, India imports around 0.6 million tonnes of palm oil, with 50 percent coming from Indonesia and the rest from Malaysia. Monthly exports are estimated to be approximately 1.1 million tonnes.
If the 0.3-million-tonne flow is disrupted, prices would rise much more, he said. "People will have to eat less edible oil." They began to use palm oil once the price of sunflower oil increased. "There is no other option now since palm oil is the cheapest oil," he explained.
Bajoria said the ban may not last more than a month since Indonesia already has 5 million tonne of palm oil and produces another 4 million tonne every month. It consumes only around 1.4 million tonne and has surplus of 2.3 million tonne every month, and not enough storage, he said. Edible oil prices in India are likely to go up by Rs 10 per kg, he said.
BV Mehta, executive director, Solvent Extractors Association of India, stated, “Every year, Indonesia produces 48 million tonnes of palm oil. Local consumption is 17 million tonnes, including a biofuel requirement, leaving roughly 31 million tonnes for export. Instead of halting exports worldwide, this situation might have been handled far more effectively.”
The Wholesale Price Index (WPI) in India increased 14.55 percent in March, reaching a four-month high. Despite the government's attempts to encourage an indigenous supply of palm oil, Indonesia's prohibition on export will result in more price increases in the coming months.
