SURGE IN GLOBAL PRICES OF EDIBLE OILS

India’s edible oil imports set for a record high.
The Global prices of edible oils, which hit an all-time high after Russia’s invasion of Ukraine, have crashed.
Sunflower has seen the greatest volatility in the prices in the last one year.
The UN Food and Agriculture Organization’s global vegetable oils price index soared to an all-time high in March 2022 after Russia’s invasion of Ukraine.
Ukraine and Russia together accounted for nearly 58% of the world’s production of sunflower oilseed.
Within the vegetable fats complex, Sunflower oil has witnessed the highest price rise and fall in last one year.
The Black Sea Grain Initiative agreement between Russia and Ukraine facilitated the safe navigation of vessels carrying grain and foodstuffs from three designated Ukrainian ports.
The opening of the corridor helped much of the sunflower oil, meal, and seed that had accumulated in Ukraine to be shipped out.
It led to international vegetable oil prices falling below even pre-war levels. Sunflower oil is currently being imported at around $950/ tonne that is less than the $990 of soyabean.

Impact of price volatility on India:

India consumes around 24 million tonnes (mt) of cooking oil annually, out of which about 14 million tonnes is imported and the balance 10 mt is produced from domestically cultivated seed.
Sunflower is the fourth largest consumed oil in India after Palm, Soyabean and mustard oil.
Both sunflower and palm oil are almost wholly imported, with their domestic production at hardly 50,000 tonnes and 0.3 mt respectively.
On the other hand, the share of domestic output for mustard and soyabean are close to 100% and 30-32% respectively.
The other locally produced oils like cottonseed, rice bran, groundnut, and coconut aren’t big enough to influence prices.
Roughly 70% of the country’s sunflower oil consumption is in the South India as sunflower is traditionally grown in Karnataka, Telangana, and Maharashtra.
Therefore, what the Indian consumer pays for edible oils is significantly dictated by import prices.

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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