Cooking oil prices to rise amid Russia-Ukraine war?

KATHMANDU: Amid a raging war between Russia and Ukraine, shipments of more than 3,50,000 tonnes of cooking oil to India are at risk as logistics and loadings remain stuck at various ports. India, the world’s largest buyer of sunflower oil with imports as high as 60 per cent of its needs, is also the top purchaser of palm and soybean oils.

Traders in the country have contracted imports of 5,50,000 tonnes of sunflower oil from Ukraine and Russia for deliveries in February and March, said a Reuters report, citing Sandeep Bajoria, president of the International Sunflower Oil Association.

While 1,80,000 tonnes of cooking oil managed to leave from the ports, Bajoria said the fate of the rest was uncertain.

Cooking oil prices may surge

Ukraine and Russia account for nearly 80 per cent of the world’s sunflower oil shipments.

If the supply gets disrupted, it increases the risk of a spike in cooking oil prices in the country. Consumer food prices already rose in January at the fastest pace in 14 months, crippling household budgets for many despite relief in taxes and imposed stockpile limits. Prices remain elevated in line with a surge in global edible oil futures.

India bought 1.89 million tonnes of the crude cooking oil till October last year, with Ukraine supplying 74 per cent of it, while Argentina and Russia each accounted for about 12 per cent of the imports.

Global prices of vegetable oils, used for everything from preparing cookies to frying potato chips to making shampoo, have more than doubled in two years over supply constraints, with palm and soybean oils surging to all-time highs this week due to supply jitters.

With the situation getting more complicated between the two countries with every passing day, western nations have warned that Kyiv could fall if the fighting continues.

Several cooking oil companies have shut operations in Ukraine. Bunge Ltd. suspended business at two oilseed processing facilities, Wilmar International Ltd’s joint venture shut its vegetable oil units in the country, while Archer-Daniels-Midland Co. closed an oilseed crushing plant in Chornomorsk.

What will India do about it?

“World over, there is going to be a shortage of sunflower oil and prices will rise,” Bajoria told Reuters. He added that Indian importers are expected to wait for about a week before they switch to palm and soybean oil purchases to boost domestic supplies.

The ongoing war between Moscow and Kyiv is among the worst security crises that Europe has seen since World War II. According to reports, the Ukrainian delegation has now agreed to meet with the Russian delegation for talks along the Ukrainian-Belarusian border. Hindustantimes

Fiscal Nepal |
Monday February 28, 2022, 03:40:25 PM |

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