India’s vegetable oil port stocks seen tightening on lower palm oil imports

Top vegetable oil buyer India’s palm oil imports rose 22% on the year to 454,794 mt in February but were lower on the month as price-sensitive buyers scaled back purchases amid high international prices, data from the Solvent Extractors’ Association showed March 14. Port stocks as of end-February dipped to their lowest since May 2021 due to hand-to-mouth buying combined with better soybean oil imports and a disruption in sunflower oil shipments from India’s main supplier, Ukraine, SEA said.

The stock of edible oils at various ports was 490,000 mt as of March 1, the lowest since April 2021 when port stocks fell to 463,000 mt, according to the SEA.

The SEA said total stocks — a metric that is a sum of port stocks and the pipeline of placed orders — was healthier end-February at 1.87 million mt, up marginally from 1.86 million mt a month before.

“For the next two-three months, we will continue to see port stocks tighten further due to the Russia-Ukraine conflict’s impact on the global trade of sunflower oil, as well as Indonesia’s increased restrictions on palm oil exports to reign in domestic edible oil prices,” Aditya Jeripotula, head of research at TransGraph Consulting, said.

Palm oil imports accounted for 46% of India’s total edible oil imports of 983,608 mt in February, up from 44% a month ago, as soybean and sunflower oil imports fell on the month as well, SEA said.

Traditionally the cheapest of the vegetable oil complex, palm oil prices have converged and sporadically crossed soybean and sunflower oil prices in the last four months, owing to production shortages in Malaysia and export curbs in Indonesia.

Almost all other major vegetable oil exporters like Argentina, Canada and Ukraine have also seen supply cutbacks in the past few months, heightening tensions of an international vegetable oil supply crunch.

The high prices may lead to demand destruction and India’s annual palm oil imports are expected to fall to 6.9 million mt in 2021-22 from 8.2 million mt in 2020-21, Dorab Mistry, an analyst and director of Godrej International, said at a conference March 9.

Alternatives uncertain
“If war continues, the shipment of sunflower oil may decline in later months, however, shortfall of sunflower oil availability could be met through higher domestic availability of soybean and mustard oils,” SEA said.

In February, about 152,000 mt sunflower oil arrived in India and a similar quantity is likely to arrive in March as ships that left before the war would arrive at Indian ports during March, SEA said.

Moving forward, it remains to be seen if domestic soybean and mustard oil production will be enough to replace the monthly sunflower oil imports, and if these will be better priced than imports of RBD [refined, bleached, deodorized] olein, said Marcello Cultrera, sales manager and derivatives dealer at Kuala Lumpur-based Phillip Futures.
Domestic supplies of mustard oil could cover about 100,000 mt of the monthly imported oil supply shortage for the next one or two quarters, Jeripotula said March 14.
Source: Platts

About the author


Leave a Comment