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

India, the world's main importer of sunflower oil, gets most of it from the Black Sea region via the Red Sea. But because of Hussite attacks, shipowners are diverting ships from Europe to Asia, bypassing Africa, which increases shipping time and cost.

Argentinian sunflower oil prices are now lower than Black Sea sunflower oil, so India may switch to buying oil from South America.

Sunflower oil prices in India surpassed soybean oil prices for the first time in a year amid higher freight costs, according to broker Sunvin Group. "During the last months, the import of sunflower oil was stable due to a better price for it than for soybean oil, however, after the increase in the price of freight, this advantage was lost," the company's experts note.

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

Two months ago, sunflower oil prices were $120/t lower than soybeans, prompting Indian buyers to increase sunflower oil imports.

In December, compared to November, India increased the import of sunflower oil twice to 260.85 thousand tons, and soybean oil by 1.8% to 152.65 thousand tons, although in 2022/23 MR, the average monthly import of soybean oil was 306 thousand tons.

If the current price trend persists, then in January the import of sunflower oil to India may decrease to 225,000 tons, and soybean oil may increase to 230,000 tons, GGN Research analysts believe.

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

In the 4 months of 2023/24, Ukraine increased its export of high-oleic sunflower oil by 18% to 120,000 tons compared to the corresponding figure of the previous season, which is still inferior to the pre-war figure. The supply of this oil to China has almost tripled to 21,000 tons compared to the same period in 2022/23.

According to the results of the 2022/23 MR, China became the main buyer of Ukrainian high-oleic oil, displacing Spain from the first place, and in the current season it still remains the leader. The second and third places are occupied by Spain and Romania, which purchased 20,000 tons of oil each, with Spain increasing purchases by 22%, and Romania by 2.6 times. But in general, the export of high-oleic oil to the European Union decreased by 13% in the 4 months of 2023/24.