India’s soft oil inflows set to beat palm oil for third straight month

India’s vegetable oil imports are expected to rise about 6% month on month to 1.3 million mt in January, with soft oils — soybean and sunflower– gaining market share from palm oil for the third straight month, according to shipping data seen by S&P Global Platts Feb. 1.

The country’s vegetable oil trade flows have changed significantly over the past few months, as palm oil prices converge with, or exceed traditionally costlier soft oils due to supply concerns and high demand in price sensitive markets, such as India — the world’s largest vegetable oil buyer.

Palm oil accounted for about 42% of January’s imports, while soybean and sunflower oils made up 58%, the data showed. Palm oil volumes have been less than 50% of India’s vegetable oil inflows since November.

Palm oil typically accounted for about 60% of India’s vegetable oil imports prior to the marketing year 2021-22 (November-October), due to its price advantage over soft oils. Palm oil’s share of the imports was 63% in MY 2020-21, according to data from national trade body, the Solvent Extractors’ Association of India, or SEA.

The SEA is expected to release official January import data by Feb. 15.

Indian importers usually prefer soft oils if their cost margin is less than $80-$100/mt over palm to minimize the risk of losses while selling in the domestic markets, where soft oil-based cooking oils command a higher premium, sources said.

January imports

India’s palm oil imports are estimated at about 544,772 mt in January, with crude palm oil, or CPO, constituting 373,705 mt and refined bleached and deodorized (RBD) palm olein comprising 125,306 mt, the port data showed.

The country’s soft oil purchases rose to 756,177 mt in January, from 650,000 mt in December, according to the data.

Crude degummed soybean oil, or CDSBO, imports increased 7% month on month to 422,658 mt in January, while crude sunflower oil, or CSFO, inflows surged 29% to 333,519 mt during the same period.

A separate source pegged January soybean oil and sunflower oil imports at 400,000 mt and near 250,000 mt, respectively.

“Rare” price levels

The average cost of importing one metric ton CPO to Mumbai was $1,505 in the week ended Jan. 28, compared with CDSBO’s $1,506 and CSFO’s $1,470, the SEA data showed. CPO import costs were at $1,047/mt in January 2021, while CDSBO’s and CSFO’s were at $1,121/mt and $1,319/mt, respectively, SEA said.

Supply concerns lifted palm oil prices to new highs in January, as Malaysia struggled with heavy rains and prolonged labor issues at its oil palm plantations, while Indonesia ordered producers to commit 20% of their output for domestic use. The two countries make up 85% of the world’s palm oil supply.

The physical market price of CPO FOB Indonesia rose about 7% to $1,395/mt Jan. 31, according to price assessments by S&P Global Platts, while soybean oil FOB Paranagua was assessed at $1,418.01/mt and Sunflower oil FOB Black Sea Ukraine at $1,400/mt

“While prices for all major vegetable oils (soybean, sunflowerseed, rapeseed, and palm) have roughly doubled over the past 18 months, gains in palm oil have exceeded those of other oils,” the US Foreign Agricultural Service, or FAS, said Jan. 12. The price levels are “not unprecedented”, the FAS said, but “still rare and reflect both strong demand for and reduced availability of palm oil.”

S&P Global Platts

Tags: India, soyoil, palm oil, sunoil, edible oil