Jaipur (commoditiescontrol) - Cottonseed oil (Binola oil) prices are continuously falling due to weak demand. The commodity has slipped about Rs 20-25/10kg in the past one month. Most of the imported edible oil is cheaper than cottonseed oil which dragged its prices down. Further correction is expected as cotton seed oil prices will not hold its losses until it falls below soya oil prices. But then, there are least possibilities that fresh buying will gain in the near term.
Dilip Agrawal, Sarika Enterprises, Khargoan (MP) said, cottonseed oil was trading at Rs 600 per 10 kilogram a month ago, which has come down to Rs 580-582 while the commodity was at Rs 620 in the corresponding period a year ago. Currently, Binola doesn’t find any buyer due to competing commodities like palm and soya oils, which are trading lower in markets, he added. Situation turned so bad that we can hardly see any forward contract in cottonseed oil at present. According to Agrawal, “bearish sentiment prevailed in the commodity and traders, stockiest and millers seem least interested in cotton seed, besides this, problems related to payment already exist in market which have affected trading activities.”
Bagirath Oil Industries, Beed, Maharashtra’s Kedar Jaju said, direction in oil market depends on the quantity of oils traded from overseas and their prices. Cotton seed oil is not seen in demand and prices of edible oil are under pressure due to CPO and palm oil, he added. According to him, “it seems that very few are consuming cotton seed oil in the country, hence negligible demand.” Cotton seed oil is trading near Rs 600 while it is at Rs 620 per 10 kilogram a month ago.
Soya refined is being quoted at Rs 575 and cottonseed oil may not attract buyers unless it falls below its substitute items in market and demand is expected after cotton seed declines up to Rs 550 per 10 kilogram, he further added. According to him, cottonseed oil can’t be sold at premium, hence, prices should be lower than soya oil by Rs 20-25. On the other hand, demand for other vegetable oils is also weak in the market which has directly pressured binola prices. CPO was quoted at Rs 420 and RBD palm at Rs 470, while soya Degum at Rs 525 and soya refined at Rs 555 at the Kandal Port.
Better sowing of cotton is reported this year and the country may record a good yield if key producing regions do not receive heavy rainfall, said Jaju. Normal rain will raise the yield and in that condition even lower acreage will put pressure on binola as sufficient quantity of raw material will be available for cotton seed oil mills. As of July 31,2015, cotton sowing covered 101.91 lakh hectares while the acreage was at 104.84 lakh hectares in the corresponding period a year ago.
Mithulal Agrawal, Ajay Aggro, Bodwad said, “Cotton seed oil will be in range bound in near term, however, cheaper import of edible oil may drag bearish trend in the market but consumers from Gujarat and Marathwada hardly like cotton seed oil and existing prices will hardly affect their demand.” In fact, people in Gujarat and Marathwada use cottonseed oil preferably for namkeen which does not have odour but other edible oils like palm and soya do.
It should be noted that cotton seed output usually, comes around 39 lakh tons in the country. As per an estimate, around 32-33 lakh tons of cotton is used for crushing after meeting the seed requirement. Around four lakh tons of cotton seed oil is produced on and average in the country, while cotton seed cake output remains around 28-30 lakh tons which is consumed in cattle feed.
(By Commoditiescontrol Bureau; +91-22-40015533)
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