MARKET DEVELOPMENT
China Demand Boosts Peanut Oil Prices
China Demand Boosts Peanut Oil Prices
24/08/2015 (Myanmar Times) - Local grocery buyers are complaining that peanut oil prices have doubled. They blame a number of causes, such as recent floods restricting supply, a tense political situation or increases in public servant salaries.
Yet industry insiders say the actually cause for the price increase over the past year is not primarily any of these factors, but instead is significant growth in Chinese demand.
Only about one-third of peanut cultivation is for local consumption, with the remainder generally exported. Chinese buyers, particularly from nearby Yunnan province, have faced local shortages of peanuts and are importing large amounts from Myanmar.
U Khin Soe, owner of Ayeyarwaddy Peanut Oil company and chair of the Yangon Region Oil Millers Association, said the price for raw peanuts is nearly triple and finished peanut oil is about double the cost of a year ago.
U Khin Soe said that peanut oil cost about K3000 per viss (1.6 kilograms) in October 2014, but has now reached K7500 per viss. Raw peanut prices have likewise risen from K1450 per viss last year, from K3750 per viss a year ago.
“It’s because of higher demand from China,” he said. “In the past, they stopped buying peanuts by June every year, but now we’re still seeing Chinese buyers.”
Domestic consumption of oil is relatively high compared to most other countries. It is locally considered a staple commodity, and the price of all edible oils are closely watched.
Peanut oil is a preferred local cooking ingredient, though other types of edible oil are frequently used as they are cheaper. Palm oil, for instance, is generally around K1500 per viss.
U Khin Soe said that for instance Japan has a population of more than 120 million, and consumes 700,000 tonnes of edible oil a year, while Myanmar with 51 million people consumes about 600,000 tonnes.
Floods have damaged about 30 percent of the current peanut crop, as the waters rose in areas with heavy amounts of peanut cultivation such as Magwe, Sagaing, Ayeyarwady and Bago regions. Still, that damage does not account for most of the price rise from a year ago, according to U Khin Soe, as the rise in price also predates the flood.
Local resident and pensioner Daw Khin New Yi said she does not trust imported palm oil for her family, fearing it can lead to health problems.
“As the price of peanut oil surged, it’s costing us more to pay for our diet,” she said.
Yet industry insiders say the actually cause for the price increase over the past year is not primarily any of these factors, but instead is significant growth in Chinese demand.
Only about one-third of peanut cultivation is for local consumption, with the remainder generally exported. Chinese buyers, particularly from nearby Yunnan province, have faced local shortages of peanuts and are importing large amounts from Myanmar.
U Khin Soe, owner of Ayeyarwaddy Peanut Oil company and chair of the Yangon Region Oil Millers Association, said the price for raw peanuts is nearly triple and finished peanut oil is about double the cost of a year ago.
U Khin Soe said that peanut oil cost about K3000 per viss (1.6 kilograms) in October 2014, but has now reached K7500 per viss. Raw peanut prices have likewise risen from K1450 per viss last year, from K3750 per viss a year ago.
“It’s because of higher demand from China,” he said. “In the past, they stopped buying peanuts by June every year, but now we’re still seeing Chinese buyers.”
Domestic consumption of oil is relatively high compared to most other countries. It is locally considered a staple commodity, and the price of all edible oils are closely watched.
Peanut oil is a preferred local cooking ingredient, though other types of edible oil are frequently used as they are cheaper. Palm oil, for instance, is generally around K1500 per viss.
U Khin Soe said that for instance Japan has a population of more than 120 million, and consumes 700,000 tonnes of edible oil a year, while Myanmar with 51 million people consumes about 600,000 tonnes.
Floods have damaged about 30 percent of the current peanut crop, as the waters rose in areas with heavy amounts of peanut cultivation such as Magwe, Sagaing, Ayeyarwady and Bago regions. Still, that damage does not account for most of the price rise from a year ago, according to U Khin Soe, as the rise in price also predates the flood.
Local resident and pensioner Daw Khin New Yi said she does not trust imported palm oil for her family, fearing it can lead to health problems.
“As the price of peanut oil surged, it’s costing us more to pay for our diet,” she said.