India’s Edible Oil Market Shifts as Palm Oil Imports Decline and Sunoil Surges

In a notable shift within the edible oil market, India has observed its palm oil imports in March dropping to a 10-month low, triggered by a spike in prices that led refiners to substitute palm oil with more affordable sunoil. This change has marked sunoil imports reaching their second-highest level on record, according to a statement from a leading trade body.

India is the world’s foremost buyer of vegetable oils, and any reduction in its palm oil purchases has the potential to temper the upward trajectory seen in benchmark Malaysian palm oil futures, which are currently flirting with peak prices not seen since last year.

The Solvent Extractors’ Association of India (SEA) released data indicating that palm oil imports reduced approximately 2.5% in March as compared to the month before, tallying up at 485,354 metric tons, the smallest amount since May of the previous year. B.V. Mehta, executive director of the SEA, spoke with Reuters and pointed out that diminished palm oil reserves in producing countries propelled costs upwards, which in turn caused Indian purchasers to pivot from palm oil to the more economical sunflower oil.

Sunflower oil imports experienced a remarkable increase, surging about 50% to 445,723 tons in March alone. This substantial import volume constitutes the second-highest figure on record for India’s sunflower oil imports.

India’s choice of crude palm oil (CPO) compared to other oils became less favorable due to a combination of price and availability. CPO was offered at around $1,040 per metric ton for May delivery on a cost, insurance and freight (CIF) basis in India, whereas soyoil and sunflower oil had their prices pegged at roughly $1,015 and $975 per ton, respectively, as per the information provided by dealers.

Interestingly, the trend was not restricted to sunoil alone. Soyoil imports in March leaped by 26.4% to 218,604 tons compared with February’s figures, although this still fell short of the monthly average soyoil imports of 306,000 tons registered in the last marketing year that ended on October 31.

The surge in sunflower oil and soyoil imports subsequently pushed India’s total edible oil imports in March to a six-month high, recording an increase of 18.8% from the previous month. The aggregate import tally stood at 1.149 million tons, indicating a strong demand for these commodities in the Indian market.

India primarily sources its palm oil from key exporting nations such as Indonesia, Malaysia, and Thailand. Meanwhile, the subcontinent relies on Argentina, Brazil, Russia, and Ukraine for its soyoil and sunflower oil supplies.

This shift in purchasing behavior underscores not only the dynamic nature of the global edible oil market but also the significant impact that pricing and availability have on the buying decisions of major importers like India. If the current trend persists, this pivot could have longer-term implications for the vegetable oil trade dynamics, particularly affecting the inventory levels in oil-producing nations.

The report released by SEA highlights a strategic move within the Indian edible oil industry in response to the fluctuating global market prices and serves as a gauge for global trends in the industry, with potential repercussions across the supply chain, from farmers and producers to refiners and end consumers. The scenario also hints at India’s robust demand for edible oils and its central role in balancing the global edible oil market.