India’s palm oil imports decline in November-December as demand for sweet oil rises

Palm oil accounted for less than half of India’s vegetable oil imports for the second consecutive month in December as its declining price advantage boosted demand for soybean and sunflower oils, according to data from national trade body, Solvent Extractors Association of India, Jan. 12.

In the first two months of India’s vegetable oil marketing year 2021-22 (November-October), soybean and sunflower oils accounted for 53% of India’s total vegetable oil imports, oil palm representing the rest, against 42% per year. ago, said SEA.

In December, imports of crude palm oil fell to 528,143 tons, down 29% from a year ago, while imports of soybean oil increased by 21% to 392,471 tons and sunflower oil imports rose 10% to 258,449 tonnes over the same period, according to MER Data.

India is the largest buyer of vegetable oil in the world and imports about 13 million tons – 14 million tons per year. The share of this palm oil is usually around 60% to 65% because it is less expensive than other oils and is preferred in the restaurant industry for its stability and shelf life. In marketing years 2020-21, the share of palm oil in imports was 63%.

The import of soybean oil is on the rise, due to lower domestic crushing, the SEA said.

The national trade body also said it expects significant imports of refined deodorized bleached palm olein of around 1 million tonnes to 1.2 million tonnes to arrive in the January quarter. -March, replacing imports of crude palm oil.

Palm loses its price advantage

In October, the average price difference between crude palm oil (CPO) and crude soybean oil (SBO) was $84/t, but it narrowed to $27/t in November and $60/t in December, according to SEA data.

December’s slightly better margin may not be enough to entice importers back into palm oil, a source told Platts. Indian importers tend to prefer sweet oils if their cost margin is less than $80 over palm oil.

“A very tight discount on palm oil compared to sweet oils (sometimes palm oil prices were even higher than soybean oil) in the Indian CNF markets has seen importers turn to more sweet oil companies buying palm oil to minimize risk,” according to Anilkumar Bagani, head of research at vegetable oil brokerage Sunvin Group.

Price assessments from S&P Global Platts showed that physical market prices for Brazil soybean oil briefly fell below palm oil prices every month from October 2021 – a rare event. In January, the CPO FOB Indonesia was valued at $1,330/ton while the SBO FOB Paranagua was set at $1,323.44/ton on January 10.

Palm oil prices are expected to remain high due to tight supply in the first quarter of 2022 and start to correct later, UOB Kay Hian said in a Malaysian plantation sector report on Jan. 11. 3,800/ton ($907.79) in 2022.

Following reports of lower-than-expected end-December stocks in Malaysia, CPO futures on the Bursa Malaysia Derivatives exchange traded near record highs, breaking through 5,000 MR/mt ($1,194.46 ) on January 11.
Source: Platts

Steve R. Hansen