Groundnut Oil Prices Explained
Groundnut oil prices consistently displayed downward trends across the global market as ample supply demands continuously flock.
For instance, its cooling prices in the North American region stem from high inventory levels and an abundant supply from domestic merchants. Additionally, reduced trading activity in Brazil (a major groundnut oil exporter ) adds pressure to its prices.
Moreover, the rising prices of alternative vegetable oils like soybean oil, which is cheaper and more versatile than groundnut oil contribute to the decreasing of its prices, particularly in India.
Why are groundnut oil prices fluctuating?
1. Substitute Cooking Oil
Generally, groundnut oil competes with other cooking oils like palm oil, soybean oil, and sunflower oil.
If the cost of a similar cooking oil, like palm oil, goes up because there is not enough supply or more people want it, consumers might choose groundnut oil if it’s still cheaper.
For example, palm oil prices in China increased due to limited supply and high demand. As a result, the rise in palm oil prices led to higher prices for groundnut oil in local markets.
2. Consumer Preference
Consumer choices have a big influence on groundnut oil demand and prices.
If more people want groundnut oil than its supply available, its prices may increase as a result of increased demand. Conversely, if the inventory is abundant the price of the groundnut oil will be lower than its usual price.
3. Market Speculations
Speculative trading involves traders and investors making predictions about the direction of commodity prices. They base their decisions on factors such as market trends, news, and economic indicators.
For instance, in 2022, due to fears of a severe frost that damaged the crop in India and Pakistan, groundnut oil prices reached a record of $2,701 per metric ton.
However, after India announced groundnut importation to suit its domestic demand, prices fell by 10% in the same year.
4. Government Policies
Government restrictions on the import or export of groundnuts might affect the total supply of the market.
It lowers the worldwide supply of groundnuts and possibly raises domestic prices, for instance, by limiting exports and controlling the amount of the product that leaves the country.
Which variables impact the price of groundnut oil?
- Substitute Cooking Oil
- Chinese Demand
- Market Speculations
- Geopolitical Factors
- Government Policies
- Consumer Preference
Where does groundnut oil come from?
Groundnut oil or peanut oil is a vegetable oil from groundnut kernels. It is used as a natural moisturizer and is ideal for cooking due to its high smoke point.
Additionally, it has multiple applications besides the food industry, such as cosmetics and personal care sectors. Groundnut oil comes in two main types:
Refined Groundnut Oil – Refined groundnut oil is a colorless, transparent liquid that is used as a cooking medium all over the world. Also, it is chosen for its mild flavor and versatility in different culinary applications.
Due to its higher smoking point, it is recommended for deep frying snacks and quick food.
Unrefined – Unrefined groundnut oil is less processed, keeping its natural flavor, color, and nutrients. It’s made using methods with minimal heat, preserving the oil’s original qualities.
Since it has a lower smoke point than processed oil, it’s suitable for cooking at medium heat. Additionally, it tastes more like peanuts, which makes it perfect for recipes that call for a nutty taste.
Basic steps to extract groundnut oil:
1. Cleaning – Groundnuts are transported to a processing facility after they are harvested. Then, they are processed with a machine for cleaning to stop these impurities from contaminating the oil.
Also, this ensures that the extraction process is carried out as efficiently as possible.
2. Dehulling – After the cleaning process, it is essential to remove the outer shell which lacks oil content. It is carried out manually by labor or with the use of a dehuller to minimize manpower and expedite production.
3. Cooking – Cooking helps release the oil-containing cells from their cell walls and lowers their density, making oil extraction easier. Although pressing is done without heating, the oil that is produced in this way is known as cold press oil.
4. Pressing – Next, peanuts are transported and directed into the screw press machine’s hopper. The continuous movement of material by the screw shaft elevates the pressure to the required level, inducing friction within the screw press.
As a result, heat is produced by this friction which lowers the oil’s viscosity in the crushed seeds and increases oil flow.
5. Filtration – After pressing, crude peanut oil retains impurities. To eliminate these impurities, oil filter press machines are commonly used.
Also, this system efficiently extracts water from the oil together with a variety of particle sizes, including small and large particulates.
What are the uses of groundnut oil?
Groundnut oil from peanuts offers a mild or neutral flavor that is enhanced through roasting for a stronger peanut aroma and taste. It is a versatile cooking oil, extensively used in Asian cuisines, and popular for frying foods.
Additionally, it is used externally for application on the skin to moisturize dry skin and for skin conditions like eczema, making it a part of many personal care products.
Furthermore, it is a good source of vitamin E and possesses antioxidant properties. Here are some common industrial uses of groundnut oil:
1. Cooking – Due to its high smoking point, it is widely used in frying and cooking as it works well for high-temperature culinary techniques like deep frying since it maintains its stability even at high temperatures.
2. Biodiesel – It has the potential to be transformed into biodiesel, serving as a renewable and eco-friendly fuel for diesel engines.
3. Cosmetics and Personal Care Products – Due to its moisturizing properties, groundnut oil is used in the cosmetic and personal care industry. It is a common ingredient in skincare products, soaps, and hair care formulas.
4. Pharmaceuticals -Groundnut oil is used in the manufacturing of specific medications and serves as a carrier oil for herbal extracts.
5. Protective Coating – Also, it has the potential to function as a protective coating for materials such as wood, metal, and paper as it creates durable films that withstand abrasion and weathering.
What is the future price of groundnut oil?
The groundnut oil market is expanding as a result of several factors including a growing demand for healthy edible oils, increased awareness of the benefits of groundnut oil, and an expanding global population.
Moreover, the rising trend of veganism and vegetarianism is fueling the need for cooking oils made from plants, especially groundnut oil.
Furthermore, the demand for more nutritious edible options such as groundnut oil is rising as people become more aware of the health advantages of these oils.
Overall, the groundnut oil price is $1,700 per metric ton by 2030, with a CAGR of 2.30% during the forecast period of 2023-2028.