Increased sunflower oil imports to India are putting pressure on soybean and palm oil prices

Prices for sunflower oil have become lower than for soybean and palm oil against the background of increased competition between the main exporters - Ukraine and the Russian Federation, whose share in total world exports is more than 70%. This allowed India to purchase a record 500,000 tons of this oil for delivery in June, Reuters reports.

The activation of sunflower oil supplies to India, the world's largest importer of vegetable oils, will reduce the reserves of this oil in the Black Sea region, which will contribute to the increase in prices.

A few weeks ago, crude sunflower oil for June delivery in India was offered at $940/t CIF (the price includes freight and insurance), soybean oil at $1,015/t CIF, and palm oil at $950/t CIF.

In the previous season, India bought an average of 250 thousand tons of sunflower oil every month, mainly from the Black Sea region. But the industry will need time to process the 500,000 tons of oil delivered in June, so its import will decrease in July.

We will remind that India buys palm oil mainly from Indonesia, Malaysia and Thailand, and soybean oil - from Argentina, Brazil and the USA.

July futures for soybean oil on the exchange in Chicago yesterday fell by 1.6% to $942/t (-2.6% from the beginning of the week) against the background of favorable weather in the US and a possible increase in soybean planting area above the forecast indicators.

August palm oil futures on Malaysia's Bursa exchange have fallen for three straight sessions amid weak exports and forecasts of higher inventories, and yesterday fell 1.1% to a 6-week low of 3,856 ringgit/t, or $820/t.

The Egyptian GASC held an international tender for the purchase of vegetable oils, but canceled it due to too high bid prices, purchasing 25,000 tons of soybean oil from 5 companies on the domestic market at a price of $973/ton.

Fitch Ratings forecasts that global palm oil prices will decline in the second half of the year due to increased oil supply, as increased rainfall will stimulate production, especially in Indonesia's agricultural regions. "After reaching $950/t at the beginning of April 2024, spot prices have slightly decreased, and at the end of 2024 they will average $775/t," Fitch experts believe.