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Cooking oil price likely to rise - Lahore_Real_Estate - 08-28-2010 12:27 PM
ISLAMABAD (August 28 2010): The price of cooking oil and ghee is expected to increase, triggered by a supply shortage subsequent to the suspension of import contracts by Malaysia at the old agreed rates and the supply shortage due to the enhanced demand for cooking oil/ghee by international donor agencies for flood victims.
According to documents available with Business Recorder, the rationale for suspension was due to the international rate rise of palm oil from $850 to $950 per ton. "Due to increase in prices, different companies in Malaysia cancelled deals at old agreed rates. Resultantly, the importers were compelled to make fresh deals at prevailing rates," sources said.
The documents show that some ghee/oil mills are directly affected by the recent floods and have stopped production. At the same time orders from different donor agencies for supply of stocks for the victims of floods have risen dramatically. These mills are currently working at capacity and may be unable to sustain supplies. Transport from Karachi is either not available or is available at very high rates due to recent Karachi disturbance/floods which has resulted in increase in transportation cost.
US dollar is also gaining strength versus Pak rupee and is currently trading at 85.90 per rupee. Increase in rates of palm olien has also impacted the domestic market rates. The rates of canola oil at Multan also rose to Rs 4500 per maund.
The government had also approved a relief package for Ramazan through a special subsidy of up to Rs 2 billion to ensure uninterrupted availability of essential food items including atta, ghee/oil, dal chana/white chana, baisen and dates at controlled rates at the utility stores. There is 50000 tons procurement target for cooking oil and ghee for Ramazan at Utility Stores. Total of 3000 tons was procured till August 16, 2010 while 20000 tons stock is in the pipeline.