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Covid-19 Effects on India's Vegoil Market

The Covid-19 pandemic significantly impacted India's vegetable oil market, leading to supply chain disruptions and increased retail prices due to panic buying. Consumption demand has decreased, particularly in the HORECA sector, with expectations of slow recovery in economic activities by Q3 2020. The Indian government aims to reduce import dependence and support domestic oilseed cultivation through policy changes and tariffs.

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Filippo Ferrari
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38 views10 pages

Covid-19 Effects on India's Vegoil Market

The Covid-19 pandemic significantly impacted India's vegetable oil market, leading to supply chain disruptions and increased retail prices due to panic buying. Consumption demand has decreased, particularly in the HORECA sector, with expectations of slow recovery in economic activities by Q3 2020. The Indian government aims to reduce import dependence and support domestic oilseed cultivation through policy changes and tariffs.

Uploaded by

Filippo Ferrari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Oils and Fats International

Covid-19 Impact on Global


Vegoil Market
OFI Webinar. June 9, 2020
******
India’s Vegetable Oil
Consumption and Import
G. Chandrashekhar
Covid-19 Impact
• India locked down w.e.f. March 25;
Country in a state of ‘forced
inactivity’; Massive job losses and
incomes; Reverse migration (> 100 mln)
• Supply chain disrupted: processing,
transport, labour;
• Panic buying by retail consumers
Covid-19 Impact
• Retail prices of almost all import
driven food products increased by 10-
20% (edible oil, pulses, spices, dry
fruits) due supply disruption in April
• Indeed, India faced both supply side
and demand side challenges
• Supply side improving due easing of
lock down
Global demand destruction:
India no exception
• Significant consumption demand
destruction since mid-March,
worsened in April and May
• HORECA / Out-of-home consumption
suffered most due lock down
• In summer, cooking oil demand
usually slows, but Ramzan saved
Demand prospects
• Consumption will continue to stay
weak June, July; Traditional festival
demand Aug/Oct unlikely to be robust
• Expect economic activities to slowly
begin to revive in Q3 (July/Sept)
provided pandemic peaks by June
• By Q4 (Oct/Dec) HORECA demand
may revive, but stay <pre-Covid level;
OoH consumers will be extra-cautious
Indian Vegoil Balance Sheet
2019-20 (million tons)
2019-20 2018-19
Opening Stock 1.8 2.5
Domestic Output 7.5 7.3
Import 13.5 15.0
TOTAL available 22.8 24.8
Consumption 21.0 23.0
End stock 1.8 1.8
India’s Oil-wise Import
(million tons)
• Oil 2019-20 2018-19
Palm 7.5 9.2
Soy 3.3 3.1
Sun 2.6 2.3
Others 0.1 0.4
TOTAL 13.5 15.0
Some Observations
• Indian government keen to reduce
dependence on imports
• To lift domestic oilseeds cultivation
and prices, expect curbs on import inc
QR as tariffs have failed to support
growers for years
• Comprehensive policy on anvil; focus
on support to growers, consumers
Some observations
• Expect palm to stay under pressure;
Rising stocks; Under-performance of
biodiesel mandate; Unlike in 2019,
China needs more soybean in 2020; If
crude oil stays ~$35 shale producers
may return;
• Support factor for commodities will
be ultra-loose monetary policy
• Post-Covid Mega-trends
Thank You. Stay Blessed
•G. Chandrashekhar
(Senior Editor and Policy Commentator)
The Hindu Business Line
• Phone: +91 9821147594
email:
gchandrashekhar@gmail.com

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