Nov 18, 2012

Peanut oil price down post harvest, say traders

The price of peanut oil has been falling fast since the last week of October, industry experts said last week.

They said the groundnut (peanut) harvest took place in October, which coincided with a significant fall-off in demand from Chinese buyers who bought cheaper, home-grown supplies.

The result is a market flooded with supply.

“Chinese traders pay about 10.5 yuan a kilogram [equivalent to K2200 a viss – 1.6kg or 3.6 pounds],” said U Naing Win, an exporter based at the Muse border trading zone in Shan State.

“If the price of groundnut in Myanmar is higher than K2000 a viss, Chinese traders will not buy and will rely on domestic crops instead,” he said.

Customers are turning from popular peanut oil because the price of Malaysian palm oil is much lower and the product is freely available, say oil traders in Yangon.

“In August and September, peanut oil prices increased to a peak of K5000 a viss, while raw groundnut was selling wholesale for about K2400 a viss,” said U Sein Than Win, the owner of Wa Kyay Hmwe edible oil trading in Theingyi Market in Yangon.

“After the rainy season groundnut harvest, the price of oil fell to K4000, while raw groundnut was selling for K1800 a viss,” he said.

“I expect the price of oil to fall over the next few months. It should be about K3400 a viss in retail markets in order to increase customer demand. Otherwise, they’ll go for imported oil.”

“Many companies are importing palm oil from Malaysia and distributing throughout the country. Actually, sesame oil is more healthy, but Myanmar people prefer peanut oil,” said U Sein Than Win.

U Aung Linn, the owner of Aung Seik Hti peanut oil mill in Myingyan township, Magway Region, said the price of raw groundnut and the oil that is milled from it are linked.

If the peanut oil price falls, the price of groundnuts will also fall, and groundnut farmers will not get a good price for their crop – and will likely sow less the following season.

But edible oil dealers said farmers could make a profit even if the groundnut price falls to K1400-K1500 a viss.

“I believe the price of peanut oil will not rise because the rainy season crop has already been harvested and the winter crop will be harvested in December. On the other hand, Chinese demand is also falling,” U Aung Linn said.

“The price of peanut oil here is K3800 a viss, but with transportation charges and with small profits added, the price increases to K4000 in Yangon,” he added.

Peanut oil is selling for K4000 a viss in Yangon’s retail market, while palm oil is K1600 and sesame oil is K3200, a cooking oil trader said on November 15.

Source: Myanmar Times