Palm Oil News: Palm Oil: Distributors resort to panic buying amid soaring prices and scarcity fears
“It is panic in the brotherhood of traders and distributors buy as much as they can get, fearing a shortage. Some companies are also abruptly canceling orders without any indication as the prices are very high at the moment,” said Dhairyashil Patil, chairman of the All India Distributors Federation.
Fears over supply shortages and a 10-15% rise in prices have led to disruptions in the palm oil and crude oil business cycles, executives said.
“There is a need to increase the inventory control limit imposed on distributors, wholesalers and retailers of cooking oils to ensure steady supply,” said Sudhakar Desai, president of India’s Vegetable Oil Producers Association.
The Indonesian ban comes at a time when commodity inflation in multiple commodities such as wheat, sugar and coffee is already at record highs. Prices for edible oils and confectionery, cookies, noodles, soaps and shampoos rose as palm oil and crude oil are key ingredients in these products, analysts said.
Akshay Modi, Managing Director of Modi Naturals, which sells premium edible oils such as Oleev, said, “We are waiting and watching as the news on the Indonesian ban changes every day. First they announced a ban on all palm oil, then they excluded crude, which was a relief, and now they included it again.
Modi said that since India imports 65% of the edible oil it consumes, and sunflower oil is not arriving anyway due to the war in Ukraine, the situation has become very delicate in reason for Indonesia’s decision.
Brokerage firm Jefferies said in a report that the ban is a major source of concern for packaged goods companies such as Hindustan Unilever, Godrej Consumer Products, Britannia and Nestle.
Although distributors, wholesalers and retailers are buying more cooking oil, some executives representing the edible oil sector have said they do not expect Indonesia’s export ban to last. beyond a few weeks.
“We expect the current cooking oil shortage to last two to three weeks. Companies are simply buying to maintain the supply chain, waiting for the Indonesian export ban to be lifted as prevailing prices are very high. “said Sandeep Bajoria, President. of the International Sunflower Oil Association.
Desai from the Indian Vegetable Oil Producers Association said, “As the palm fruit is highly perishable and Indonesia does not have enough storage, they will have to resume exports after Ramadan.”
Desai thinks companies are currently resisting buying excess inventory because cooking oil prices in futures markets could be cheaper.
Cooking oil prices have jumped by 5-6 rupees per kg in the last three or four days. Prices could rise further in May due to lower imports. “High prices could cause domestic consumption to drop by around 2-3%,” he added.
India could face a shortage of 300,000 tons of cooking oil in May, officials said, adding that the only way to deal with the situation would be to reduce consumption. “Consumers will have to consume less because prices will remain high for a few more days after Ramadan. The situation is out of anyone’s control,” Bajoria said.
Reuters, in a report on Thursday citing four industry officials, said Indonesia, which expanded its palm oil export ban late last week, trapped at least 290,000 tonnes of edible oil destined for India in ports and oil mills.