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Rising Sunflower Oil and Wheat Prices Impact India's Markets
India imports sunflower and soybean oils to meet domestic demand, and the suspension of the deal has caused an increase in sunflower oil prices by almost 8 per cent
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The rising prices of sunflower oil and wheat in India can be attributed to several factors. Firstly, the suspension of the commodity deal between Russia and Ukraine has halted shipments of sunflower oil to India, leading to an 8 per cent increase in its prices. Additionally, Russia's bombing of the Ukrainian grain port of Odesa has disrupted grain supplies, impacting wheat prices.
India imports sunflower and soybean oils to meet domestic demand, and the suspension of the deal has caused an increase in sunflower oil prices by almost 8 per cent. Dry weather conditions in the US have also affected soybean production, contributing to a 5 per cent rise in soybean oil prices.
The current oil year (October 2022 – November 2023) is expected to see a higher demand for sunflower oil in India, reaching 3 million tonnes compared to 2.3 million tonnes last year, due to reduced cooking oil prices. India typically imports 14.5-15 million tonnes of oil annually.
The suspension of the grain deal by Russia has also impacted consumer staple companies. While imported sunflower oil prices have risen from USD 960 to USD 1030 per tonne, retail prices cannot be immediately increased.
Furthermore, global wheat prices have witnessed a significant increase due to Russia's withdrawal from the Black Sea grain deal. European wheat prices rose by nearly 9 per cent in a single day, reaching USD 284 per tonne, and US wheat futures experienced an 8.5 USD increase, the highest since the war outbreak last year. Wheat prices are expected to continue rising by 15 per cent over the next few months.
Dry weather conditions in the US are another concern for the Indian edible oil industry, as soybean acreage is down 4.6 per cent compared to the previous year.
Overall, the surge in sunflower oil and wheat prices in India can be attributed to the suspension of the Russia-Ukraine commodity deal and dry weather conditions in the US. These factors have affected oil imports and grain prices, posing challenges for consumers and the edible oil industry in India.