India will import another 200,000 tons of sunflower oil by the end of March

During the current financial year (ending March 31), India will import 1.5 million tons of duty-free sunflower oil, which is 500,000 tons less than the quota allocated by the government, trade and government sources said.

India, the world's largest importer of vegetable oils, buys sunflower oil from the Black Sea region, which accounts for 60% of global production and 76% of sunflower oil exports. In FY 2022/23, the country has already imported 1.3 million tons of duty-free sunflower oil, and by March 31, it can buy another 200,000 tons. The reduction in imports increases the concerns of traders regarding the conclusion of agreements for the purchase of large batches of vegetable oils from Ukraine and the Russian Federation.

The Black Sea Grain Agreement, which was concluded through the mediation of the UN and Turkey in July for 120 days, and which was extended in November, should be renewed on March 18 and will allow the delivery of agricultural products from Ukraine through the Black Sea ports. However, uncertainty about its continuation forces traders to behave cautiously to avoid risks.

Recent increases in freight and insurance costs for the Black Sea have deterred buyers from entering into import deals from the region, although elsewhere, such as Argentina, supply of duty-free sunflower oil is limited.

We will remind that India allowed the duty-free import of 2 million tons of unrefined sunflower oil until March 31, 2024, but stopped the duty-free import of crude soybean oil from April 1, 2023, which in the current season amounted to 1.7 million tons, and until March 31 may grow to 2 million tons.

According to the Trading Economics platform, against the background of low demand from India and increased offers from the Russian Federation, prices for Ukrainian sunflower oil with delivery to buyers during February fell by another 8% to $1,060/t CIF.

The extension of the grain corridor for at least another 60 days, which the Russian Federation agreed to, will lead to increased demand for Ukrainian oil from Indian importers.