India’s vegetable oil imports up 16% in January on surge in soft oil demand

India’s monthly vegetable oil imports climbed to 1.27 million mt in January, up 16% from a year back due to increased purchases of soybean and sunflower oils, industry body, the Solvent Extractors’ Association of India, said Feb. 14.

Trade flows at the world’s largest vegetable oil buyer have shifted since the start of marketing year 2021-22 (November-October) as palm oil prices have risen sharply in the past year. From being the cheapest oil pre-pandemic, they have converged with and occasionally surpassed soybean and sunflower oil prices in international markets in 2022.

Palm oil imports fell to 553,084 mt in January from 565,943 mt in December. Meanwhile, soft oil imports rose to 698,842 mt from 650,920 mt at the same time.

In January, soft oils (soybean and sunflower) accounted for 56% of the total vegetable oil imports, with crude and refined palm oil products accounting for the rest, SEA said. This share of soft oil imports has improved from 53% in December, the data showed.

The import of soybean oil was up by 90% in the first quarter of MY 2021-22 due to decline in domestic crushing, while crude palm oil import was down by 24%, compared to MY 2020-21, the association, also called SEA, said in its monthly release.

Palm oil typically accounted for about 60% of India’s vegetable oil imports prior to MY 2021-22.

An advance estimate of India’s January vegetable oil inflows by S&P Global Platts projected total vegetable oil imports of 1.3 million mt Feb. 2. Palm oil imports were expected to account for 42% of January’s imports, while soybean and sunflower oils were forecast to make up for 58%.

Import duties equalized

India reduced the agri infra development cess, or AIDC, on import of crude palm oil, or CPO, to 5% from 7.5% Feb. 12. New Delhi has slashed import duties progressively in the last one year to lower domestic cooking oil prices and ease food inflation.

The Feb. 12 notification effectively equalizes the net import duty on CPO with that of crude soybean, sunflower oils at 5.5% till Sept. 30, 2022. Import duties on refined vegetable oil remained unchanged.

“Now price spread will be the deciding factor to guide the import of major oils that is CPO, palm olein, CDSBO [crude degummed soybean oil], and CSFO [crude sunflower oil],” Anilkumar Bagani, head of research at Mumbai-based vegetable oil brokerage Sunvin Group told Platts.

“Currently palm oil import margins are in deep negative territory, and it is an unlikely scenario that palm oil will get back the share it lost to soft oils back any time soon.”

The average cost of importing 1 mt CPO to Mumbai was $1,535 in the week ended Feb. 11, compared with CDSBO’s $1,543 and CSFO’s $1,480, SEA data showed.

A year back, CPO import costs were at $1,089/mt in February 2021, while CDSBO’s and CSFO’s were at $1,126/mt and $1,400/mt, respectively.

S&P Global Platts

Tags: sunflower oil, soybean oil, India