Significant vegetable oil stocks at Indian ports could put pressure on global prices, especially amid seasonal supply increases

A sharp increase in vegetable oil imports into India has led to a shortage of free storage tanks at the country's major ports, delaying ship unloading by up to 10 days and could force processors to cut purchases in the near future.

The situation is most difficult at the port of Kandla (which handles a third of edible oil imports), where at least 9 ships with 300,000 tons of oil are waiting to be unloaded. The port of Holdia, the second largest importer of vegetable oils, also has a capacity shortage.

Recall that in August, India increased its vegetable oil imports to an 11-month high of 1.54 million tons , and planned to import about the same amount in September. Processors have stepped up purchases of oils for delivery in August-September ahead of the holiday season, thanks to low prices for the nearest contracts.

However, slower-than-expected domestic consumption growth has led to a build-up of inventories at ports. Indian refiners will therefore reduce purchases of vegetable oils for delivery in October-December, which will increase pressure on prices, especially given the seasonal increase in sunflower and palm oil supplies.

Reduced demand from India will increase oil stocks in major exporting countries, which will increase pressure on global palm and soybean oil prices.

India buys palm oil mainly from Indonesia and Malaysia, and soybean and sunflower oil from Argentina, Brazil, Ukraine, and the Russian Federation.