India reduced vegetable oil imports by 1.4% in February, increasing supplies of cheap palm oil and reducing purchases of sunflower oil.

India in February reduced imports of vegetable oils by 1.4% compared to January to 1.29 million tons, sharply reducing purchases of sunflower oil, which was partially offset by an increase in supplies of cheap palm oil by 10.1% to a 6-month high of 844 thousand tons. Recall that in January, imports of vegetable oils decreased by 3.5%, but purchases of palm oil increased significantly.

While soybean oil imports fell to a 19-month low in January, they increased by 8.7% in February to 303,000 tons. At the same time, sunflower oil imports decreased by 45.3% to 146,000 tons due to a sharp increase in prices and a shortage of supplies from Ukraine and the Russian Federation.

Palm oil imports surged in January, thanks to a deep discount on it compared to other oils, and now rising temperatures have allowed refiners to start stockpiling. India typically reduces palm oil imports during the winter because its low freezing point limits its use in the country's northern regions. But supplies are starting to pick up in March, helped by low prices.

Import data does not take into account the volume of duty-free supplies across the land border with Nepal, from where India imported 70,000 tons of vegetable oils, mainly soybean, in February.

A 15% rise in oil prices has supported vegetable oil prices, but palm oil futures on Bursa Malaysia have risen only 3.4% to RM4,179/t since Monday, although the dollar price remained at $1,060/t due to the strengthening ringgit, while soybean oil in Argentina is offered at $1,110-1,115/t FOB Up River and in Brazil at $1,100/t FOB. Soybean oil prices in Dalian, China, remain low at $1,200/t, and China has been supplying soybean oil to India since late last year.

Offer prices for sunflower oil for delivery to India increased by $10-20/t to $1,410-1,420/t CIF Mumbai following an increase in offer prices for Russian sunflower oil to $1,300-1,320/t FOB.

Seasonal increases in palm oil supplies and new crop soybean oil deliveries from South America will increase competition in the Indian market and lead to further price declines. Therefore, we expect demand for expensive sunflower oil to continue to decline in March.