India increases vegetable oil imports due to increased supplies of cheap soybean oil

India has sharply increased its vegetable oil imports ahead of the festive season. In August, imports of edible vegetable oils rose 4% from July to an 11-month high of 1.54 million tonnes, with soybean oil up 21% to a record 601,000 tonnes and palm oil up 7% to a 6-month high of 780,000 tonnes. This does not include duty-free imports of 100,000 tonnes of oil from Nepal (including 90,000 tonnes of soybean oil).

At the same time, sunflower oil supplies in August decreased by 38% compared to July to a 6-month low of 157 thousand tons due to the blockade of exports from the Black Sea region.

As a reminder, India celebrates a number of holidays from August to November, so processors are preparing for the season of increased demand and increasing purchases of oils, especially soybean oil from South America, as its prices are lower than palm oil. Therefore, market participants expect that in September the demand for soybean and palm oil will remain high, which will support world quotes.

India, the world's largest importer of vegetable oils, buys palm oil mainly from Indonesia and Malaysia, and soybean and sunflower oil from Argentina, Brazil, Ukraine, and the Russian Federation.

Amid a record soybean harvest, soybean oil prices in Brazil have fallen to $1,150-1,210/t FOB, while in Argentina soybean oil prices are even $15-30/t lower. At the same time, palm oil prices in Malaysia have risen to $1,200-1,230/t FOB, which has contributed to increased soybean oil supplies.

Currently, palm oil prices on a CFR India basis are $1,240-1,270/tonne, which is $30/tonne higher than soybean oil, and sunflower oil prices have risen to $1,460-1,470/tonne, although palm oil is usually traded at a discount of $100-150/tonne to soybean oil and $250-300/tonne to sunflower oil. However, due to the limited supplies from the Black Sea region, palm oil is now receiving additional premiums.