Commodities

Lacklustre HoReCa segment wipes out demand for edible oils

AJ Vinayak Mangaluru | Updated on November 14, 2020 Published on November 13, 2020

It will take time for offtake to touch pre-Covid levels, say market experts

 

The period from August to November sees edible oil demand go up in India because of festivals and increased home cooking. This year, however, the situation is different. Scaling down of festival celebrations by people due to the pandemic and lack of bulk demand have impacted the edible oil segment.

Sudhakar Rao Desai, President of Indian Vegetable Oil Producers’ Association (IVPA), told BusinessLine that there was no increase in demand during festival season this year as the festivities are subdued. There used to be around 5-10 per cent demand growth during festival seasons of pre-Covid years.

Quoting his interactions with edible oil suppliers in the country, BV Mehta, Executive Director of Solvent Extractors’ Association (SEA) of India, told BusinessLine that the suppliers have not found peak oil demand during current the festival season. “They say that they don’t see the pressure of demand this year,” he added.

Though practically India is in a festival season, there is no extra demand. The demand is mainly from the home consumption segment, as people don’t go to hotels, marriage functions, or any other programmes where there is a huge consumption of edible oil, he said.

Stating that the consumption in HoReCa (hotels, restaurants and canteen) was not there during April-June period as the entire segment was shut down due to lockdown, he said this affected the demand for edible oils.

Demand destruction

Both urban and rural areas have been witnessing demand drop from HoReCa segment for edible oils.

Due to Covid, the number of social gatherings is less; even if people do organise programmes in their places, they do it with restricted number of invitees. MK Abbas, a caterer, said people like him in the catering sector had to sit idle for around three months this year as there were no functions at all during the peak marriage season in summer.

The HoReCa segment has seen a recovery in the last three months, however, BV Mehta said it may take another 3-6 months for the industry to come back to the normal position.

Palm oil demand

The increase in home cooking has resulted in lower demand for palm oil, this year. However, other soft oils such as soyabean, sunflower and mustard have seen an increase in imports.

On the price increase in the edible oil segment, Mehta said that prices firmed up in the range of 10-12 per cent in the last two months because of various global factors. He said the total consumption of edible oils may be down by 2 million tonnes for November 2019-October 2020 period. It may come down to 21 million tonnes this year against the normal demand of around 23 million tonnes.

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Published on November 13, 2020
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