08/12/2010 (The Hindu Business Line) - With the groundnut crop estimated higher this kharif against last year, the premium enjoyed by groundnut oil against soyabean oil and RBD (refined, bleached and deodourised) palm oil has dropped.

“Groundnut production this kharif is estimated at 41 lakh tonnes against 32.9 lakh tonnes last year. This has brought down the premium for the oil by nearly half,” said Mr Govindlal G. Patel, Director of Deepak Enterprise that deals in edible oils.

Currently, groundnut oil is quoted at Rs 780 for 10 kg against Rs 560 for soyabean oil and RBD palmolein Rs 554. During the same time last year, groundnut oil was quoted at Rs 681, while soyabean and RBD palmolein quoted at Rs 430 and Rs 388 respectively.

Initially, groundnut production was estimated at 18.7 lakh tonnes in Gujarat but due to rains in early November, it could now be lower at 17.7 lakh tonnes.

“Besides quantity, there has also been damage in quality,” Mr Patel said.

“There is definitely quality problem with groundnut that is arriving now. If crushed, it is leading to higher FFA,” said Mr Bipin V. Patel of S.K. Industries.

“Groundnut oil today is a premium product. Therefore, our product has to be good and fit enough for consumption by the elite few,” said Mr Shanthibhai Chaganbhai of Kanaiya Oil Industries at Keshod. “There is a perceptible shift in groundnut oil consumption. It makes some five per cent of the total edible oil consumption in the country. Only the elite ones are consuming groundnut oil these days,” said Mr Govindlal Patel.

The problem with the current arrivals is that once the groundnut kernel is crushed, the oil that is derived is of a little blackish yellow colour than the usual golden yellow.

“There may not be any problem in consuming it now. But you can store it for six months and then use it since the FFA is higher,” said Mr Hitesh H. Vithlani, a trader in Rajkot.

“The smell will not be good if it is stored,” he said. “Even the kernel that arrives is discoloured. That could also affect direct consumption,” said Mr Govindlal Patel.

Arrivals have peaked and they will continue until January. Though groundnut production is estimated higher, the kernel availability is 28.70 lakh tonnes. Of this, only eight lakh tonnes will be available for crushing with the rest going for direct consumption and retention by growers for sowing and other purposes. This will result in oil availability of 3.48 lakh tonnes.

Last year, of the 23 lakh tonnes of kernel produced, 18.6 lakh tonnes were retained by growers, leading to availability of 4.4 lakh tonnes. This resulted in oil availability of 1.8 lakh tonnes.