India is facing a significant surge in the prices of sunflower oil and wheat due to a combination of geopolitical developments and adverse weather conditions affecting key exporting countries. These factors have led to concerns among consumers and businesses, leading to uncertainties in the market.
The recent suspension of a trade deal between Russia and Ukraine has had a major impact on the availability and cost of sunflower oil in India. The deal allowed the export of commodities from war-torn Ukraine through the Black Sea. However, it was abruptly halted by Russia, resulting in a sudden stoppage of shipments of sunflower oil to India.
Adding to the woes, reports have emerged of Russia bombing the Ukrainian grain port of Odesa, resulting in the destruction of over 60,000 tonnes of grain. This disruption has further affected India’s imports of sunflower oil, leading to an almost 8% increase in prices.
Soyabean oil prices have also seen a hike in India due to dry weather conditions in the United States. As a major producer and exporter of soybeans, the adverse weather has significantly impacted soybean production, causing a 5% increase in soyabean oil prices within a week. India, being a major importer of both sunflower and soyabean oils, is feeling the impact of these international developments.
Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage, and consultancy firm, has highlighted the situation, warning that if Russia does not extend the grain deal, sunflower oil prices may increase further. With an increase in oil consumption after cooking oil prices fell from the previous year, the demand for sunflower oil is expected to reach 3 million tonnes in the current oil year, up from 2.3 million tonnes last year.
Consumer staple companies in India are also grappling with the impact of rising oil prices. Rising from $960 per tonne to USD 1030 per tonne in just a few days, Pradeep Chowdhry, managing director of Gemini Edibles & Fats, expressed concern over the increasing prices of imported sunflower oil. However, increasing retail prices immediately might not be feasible for these companies, leading to potential profit squeezes.
In addition to sunflower oil, global wheat prices have also surged in response to the suspension of the Black Sea grain deal by Russia. Wheat prices on the European stock exchange experienced an almost 9% increase in a single day, reaching USD 284 per tonne. Additionally, US wheat futures saw an 8.5% jump, the highest daily rise since the conflict broke out in February of the previous year. Experts predict a further 15% increase in wheat prices in the next three to four months, adding to the concerns of the Indian edible oil industry.
Anjani Aggarwal, the past president of the Roller Flour Millers Association of India, has stated that the suspension of the grain deal by Russia is expected to exacerbate the already rising wheat prices in the global market. The situation calls for cautious monitoring of the market and its potential impact on the Indian economy.