Tense situation in the Red Sea will force India to increase oil supplies from South America

India, which is the world’s main importer of sunflower oil, gets most of it from the Black Sea region via the Red Sea. But due to Houthi attacks, shipowners are sending ships from Europe to Asia bypassing Africa, which increases the time and cost of delivery.

Prices for Argentine sunflower oil are now lower than for Black Sea oil, so India may shift to buying oil from South America.

According to the brokerage Sunvin Group, amid rising freight costs, the prices of sunflower oil in India exceeded the prices of soybean oil for the first time in a year. “In recent months, the import of sunflower oil has been stable due to the better price for it than for soybean oil, but after the rise in freight prices, this advantage has been lost,” the company’s experts said.

Currently, imported crude sunflower oil in India is offered at $943/t CIF (cost, insurance and freight) for delivery in February, while crude soybean oil is offered at $935/t and crude palm oil at $933/t.

Two months ago, the price of sunflower oil was 120 $/t lower than soybean oil, which prompted Indian buyers to increase imports of sunflower oil.

In December, India doubled the imports of sunflower oil to 260.85 thsd tonnes compared to November, and soybean oil – by 1.8% to 152.65 thsd tonnes, although in 2022/23 MY the average monthly imports of soybean oil amounted to 306 thsd tonnes.

If the current price trend continues, in January, imports of sunflower oil to India may decrease to 225 thousand tons, and soybean oil may increase to 230 thousand tons, according to analysts of GGN Research.

India imports palm oil from Indonesia, Malaysia and Thailand, and soybean and sunflower oil from Argentina, Brazil, Ukraine and Russia.

In 4 months of 2023/24 MY, Ukraine increased exports of high oleic sunflower oil by 18% to 120 thsd tonnes compared to the same period of the previous season, which is still below the pre-war level. The supply of the oil to China increased almost threefold to 21 thsd tonnes compared to the same period of 2022/23 MY.

According to the results of 2022/23 MY, China became the main buyer of Ukrainian high oleic oil, having ousted Spain from the first place, and in the current season it still remains the leader. Spain and Romania took the second and third places, having purchased 20 thsd tonnes of the oil each, with Spain increasing the purchases by 22% and Romania – by 2.6 times. But in general, the exports of high oleic oil to the EU decreased by 13% in 4 months of 2023/24 MY.

Tags: Ukraine, Russia, sunflower oil, Brazil, prices, Black Sea region, India, Argentina