India increases imports of sunflower oil and decreases imports of palm oil, which lowers its prices
India may cut palm oil imports to a 27-month low in May as buyers favor sunflower and soybean oils amid lower prices.
On May 1-20, 261,000 tons of palm oil were delivered to the country's ports, and the total import in May may reach 411,000 tons, while for the first 6 months of 2022/23 MR, the average monthly import of this oil was 818,203,000 tons.
Price is an important factor for Asian buyers who have bought palm oil due to its low cost and fast delivery. However, now palm oil has become more expensive than other edible oils. While last year palm oil was at a $500/t discount compared to competing oils, it is now more expensive than sunflower oil as Indonesia and Malaysia cut production due to heavy rains.
Compared to April, India is expected to increase its imports of sunflower oil by 28% to 319,000 tons and soybean oil by 16% to 305,000 tons in May.
July palm oil futures on Malaysia's Bursa exchange yesterday fell 1.5% to a 3-week low of 3,378 ringgit/t, or $762/t, on expectations of a reduction in demand and an increase in production.
Traders believe palm oil prices will fall more than other oils in the near term to revive demand from buyers in China and India, but the premium for sunflower oil over palm oil will return.
Sunflower oil prices fell to $875/t with delivery to buyers, but are unlikely to continue to fall, as farmers in Ukraine and the Russian Federation are not ready to sell sunflowers at low prices, and processors are now preparing for the new season and stopping production due to low demand for oil and limited offers of raw materials.
Brokerage UOB KayHian believes that palm oil prices will start to rise again as the market realizes that its supply will be limited in the second half of 2023 and even into 2024, as the three-year impact of the La Niña phenomenon has sharply worsened the condition of oil palm.
July soybean oil futures on the Chicago Stock Exchange rose 3% on Monday, but fell 2% yesterday to $1,052/t (-10% on the month) amid a drop in soybean prices due to high US planting rates.
