As Ukraine war heats up, cooking oil prices to rise
THE RUSSIAN invasion of Ukraine is going to have an impact not only on global crude prices and what Indians will pay for petrol, diesel and LPG cylinders once elections in Uttar Pradesh conclude on March 7, it will also affect prices of cooking oil —which is likely to be more immediate.
India consumes around 2.5 million tonnes (MT) of sunflower oil annually. That makes it the fourth most consumed edible oil, after palm (8-8.5 MT), soyabean (4.5 MT) and mustard/rapeseed (3 MT). But India hardly produces 50,000 tonnes of sunflower oil and imports the rest – much of it from Ukraine and Russia.
According to Commerce Ministry data, the country’s sunflower oil imports totalled 2.5 MT in 2019-20 (April-March) and 2.2 MT in 2020-21, valued at $1.89 billion and $1.96 billion, respectively. Out of the total imports, Ukraine accounted for 1.93 MT (worth $1.47 billion) in 2019-20 and 1.74 MT ($1.6 billion) in 2020-21, with Russia’s corresponding share at 0.38 MT ($287 million) and 0.28 MT ($235.89 million). Some quantities were also imported from Argentina: 0.17 MT in 2019-20 and 0.14 MT in 2020-21.
“We import about 200,000 tonnes every month in 20,000-50,000 tonne vessels from Black Sea ports in Ukraine and Russia. That entire trade now stands disrupted,” said B.V. Mehta, executive director of the Mumbai-based Solvent Extractors’ Association of India. Ukraine’s military has already suspended operations at its ports.
Global sunflower oil prices have been rising even before the declaration of war by Russia. On Wednesday, the landed price of imported crude sunflower oil in Mumbai (cost plus insurance and freight) was $1,630 per tonne, against $1,500, $1,455 and $1,400 a week, month and year ago. “We don’t know where prices will go from here,” added Mehta.
But it isn’t only sunflower. Other oils, too, have moved up in sympathy. Crude palm oil and degummed soyabean oil imported into Mumbai were quoted at $1,810 and $1,777 per tonne, respectively, against their corresponding week-ago, month-ago and year-ago levels of $1,545 and $1,626, $1,460 and $1,472, and $1,089 and $1,126 per tonne.
Moreover, the upward price pressure could come from another source as well. As Brent crude prices have crossed $100/barrel, it becomes that much more attractive to divert palm and soyabean oil for bio-diesel production.
The positive side to all this, however, is that Indian farmers will realise good prices for their mustard crop due for harvesting from mid-March.
