15/10/2010 (The Economic Times), KOLKATA - Cooking oil prices firm up as India celebrates festivals with gusto. Soyabean oil , palm oil, and sunflower oil turn costlier as import prices increases by at least $90 per tonne in last fortnight. This is forcing the companies to increase prices of their branded products in the festive season.

The rally is largely driven by the surge in international markets following the report from the United Stated Department of Agriculture (USDA), cutting the soyabean harvest figures for the world’s largest soyabean producer from 3.475 million bushels to 3.408 million bushels. Further, the USDA has cut the soyabean planted area by 1.2 million acres, dropping the yield expectations from 44.7 to 44.4 bushels per acre.

“The increase in Black Sea sunflower oil prices is due to the lingering Russian drought. It is likely that Russia may put a ban on export of sunflower oil. Ukrainian production is also under pressure. This is pushing up the prices,” said Angshu Mallik, vice-president (sales and marketing), Adani Wilmar. In fact, Adani Wilmar plans to increase retail prices by Rs 2 per kg.

The weakness of dollar against the major currencies has been the underlying supportive factor. China’s large appetite for the oilseed has also been adding allure to the rally. “What also remains a concern is the lack of availability of soya oil in the South American system which is currently facing the effects of La Nina driving in fears of a drought like scenario and thereby raising questions over the upcoming soyabean crop,” said Ankita Parekh, research analyst at Geojit Comtrade.

Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil consultancy firm, said price of soya oil has increased by $90 per metric tonne in last eight days. Similarly, price of palm oil has increased to $980 per metric tonne from $890. In the domestic market, soya oil price has gone up to Rs 525 per 10 kg from Rs 485 per kg.

Palm oil prices have gone up to Rs 475 per 10 kg from Rs 445 per 10 kg a week ago. “Malaysian palm oil crop is down, which has impacted the surge in price. Moreover, the hedge funds have entered the commodities in a big way which is pushing up prices,” said Mr Bajoria.

“It is expected that the market will consolidate in the range of Rs 530-505 per 10 kg for soya oil with intermediate corrections which would be healthy for the markets and then make headway towards Rs 538-545 in the near future,” said Ms Parekh.