Palm oil at a year-to-date low, but companies have yet to pass on profits

Palm oil – a key ingredient for products ranging from processed foods to cosmetics and soaps – is trading at its lowest level since June last year, but consumer companies say they cannot further reduce consumer prices due to the high cost of other raw materials.

Edible oil makers, however, said they were passing the cost reduction on to consumers, effective immediately.

Companies including

the market leader in several product categories, and reported high inflation in basic raw materials as the most significant factor impacting their results over the past year.

While commodity prices have selectively softened, companies said the decline was not enough to offset earnings pressures as prices remain significantly higher year-on-year.

“It’s hard to get the prices of small packs down right now; although palm oil has fallen, wheat and sugar prices have increased by around 10-15% in the last two months,” said Mayank Shah, Category Manager at Major Biscuits. manufacturer Parle Products.

Biscuit maker Milano and Hide & Seek are offering 10-15% discounts on larger packs and will assess whether to keep the discounts or return to original prices after the holiday season, Shah added.

Saurabh Saith, CEO of Orion India, said, “Palm oil is just one of the key ingredients… Our fruit jam costs are significantly higher than last year. Transport costs are also higher, so profitability remains under pressure.

Makers of the Chocopie brand of confectionery and rice crackers, such as Parle, offer higher consumer deals during the holiday season.

in an industry update on Monday, said: “We believe the benefits of commodity easing are likely to be limited given the required advertising and promotional investments, which have lagged.”

Analysts said the full impact of lower raw material costs, if sustained, would be felt from the December quarter. “We expect gross margins to remain under pressure in the near term as businesses sit on inventory purchased at higher costs, which will be consumed in the near term,”

said in a report.

Edible oil prices, however, have fallen over the past month and companies expect prices to fall further.

Pradeep Chowdhry, managing director of Gemini Edibles & Fats, said lower prices would be immediately passed on to consumers. He said the price of palm oil fell to ₹90 per liter from ₹97-98 as of Monday. Four months ago, the price of palm oil was ₹160 per litre, Chowdhry said.

Sudhakar Desai, Managing Director of

Agrotech said domestic edible oil prices will reflect international market movement. “It’s a competitive market. Business prices are already down about 40-45%,” he said.