India cancels soybean oil imports from South America

India has canceled soybean oil shipments from South America due to the falling rupee and the price difference between local and imported oil.

 

The depreciation of the rupee and rising world prices have led to South American soybean oil being traded at $25-30/t more expensive than local soybean oil, making its import unprofitable, so Indian buyers have turned their attention to tropical oil, which is traded at deep discounts.

 

According to Bloomberg, since the beginning of the year, the premium for soybean oil compared to palm oil has doubled and is $146/t.

 

India has so far refused to supply 35-40 thousand tons of soybean oil from Brazil and Argentina, which were to be delivered in February and April-July, and in total may cancel supplies of more than 50 thousand tons of oil, according to Patanjali Foods Ltd., one of the country's largest buyers of vegetable oils.

 

In December, Indian buyers refused to purchase 100,000 tons of Argentine oil, which is about 20% of the country's monthly imports. India supplies almost 60% of its consumption with imported oils.

 

South American soybean oil stocks have fallen after China's increased purchases of soybeans reduced supplies of raw materials for processing into oil. According to analysts, prices for Argentine soybean oil have reached a year's high.

 

Soybean oil prices in Chicago also rose, but the trend was different in India as the rupee fell to a record low against the dollar. This could increase soybean oil rejections and boost palm oil imports.

 

Palm oil futures in Kuala Lumpur have risen only 2.6% to 4,156 ringgit/t since the beginning of the year, while soybean oil in Chicago has risen 11% in price during this time.