India has significantly increased its edible oil imports for July delivery, setting a new record as refiners boost their purchases of palm oil and soy oil. This surge in imports is attributed to favourable pricing and anticipation of a potential increase in import duties, according to industry and government sources who shared information with Reuters.
The substantial increase in palm oil purchases by India, which holds the position of the world’s largest importer of vegetable oils, is expected to have a positive impact on producer countries like Indonesia and Malaysia. This increased demand will help reduce their inventories and provide support for benchmark prices in the global market.
Based on average estimates from data provided by trade houses, edible oil imports are projected to reach an unprecedented 1.92 million metric tons, representing a significant increase of nearly 26 per cent compared to the previous month. This figure stands in stark contrast to the average imports of 1.2 million tons that India has been maintaining since the beginning of the current marketing year in November 2023.
A government official, speaking on condition of anonymity due to lack of authorization to address the media, revealed that approximately 1.45 million tons of edible oils have already been discharged at various ports across the country. Of this total, 850,000 tons consist of palm oil.
Palm oil imports for July are expected to see a remarkable 45 per cent increase from the previous month, reaching 1.14 million metric tons. This would mark the highest level of palm oil imports in 20 months, according to industry dealers.
Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage, explained that the correction in palm oil prices during May and June made it more competitive compared to rival oils. Additionally, healthy refining margins in India during this period encouraged refiners to place orders for July shipments. The price advantage of palm oil became particularly evident as its discount to soy oil widened to more than USD 100 per ton in May, up from less than USD 10 in April.
Another factor contributing to the surge in imports was the expectation of a potential duty hike in the budget, which prompted some buyers to increase their purchases for July shipments. However, when Finance Minister Nirmala Sitharaman presented the Union Budget for the 2024-25 financial year on July 23, no changes were made to the duty structure on edible oils.
While palm oil imports have seen a significant rise, soy oil imports are also set to increase substantially. July soy oil imports are projected to jump by 45 per cent compared to the previous month, reaching 400,000 metric tons – the highest level in 13 months. Rajesh Patel, managing partner at edible oil trader and broker GGN Research, attributed this increase partly to delayed shipments from South America, which typically take more than six weeks to arrive, finally landing in July.
In contrast to the rise in palm oil and soy oil imports, sunflower oil imports are expected to decrease. Projections indicate a decline of 18 per cent from the previous month’s record shipments, with July imports estimated at 380,000 tons.
India primarily sources its palm oil from Indonesia, Malaysia, and Thailand, while soy oil and sunflower oil are imported from Argentina, Brazil, Russia, and Ukraine. This diversification in sourcing helps India maintain a steady supply of edible oils to meet its domestic demand.
The record-breaking edible oil imports for July highlight India’s significant role in the global vegetable oil market and underscore the country’s increasing demand for these essential commodities. The fluctuations in import volumes of different oil types also reflect the dynamic nature of the international edible oil trade and its sensitivity to price changes and market expectations.