India’s palm oil imports shrink in Nov-Dec as soft oil demand grows

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Palm oil accounted for less than half of India’s vegetable oil imports for the second consecutive month in December as its narrowing price advantage boosted demand for soybean and sunflower oils, data from national trade body, the Solvent Extractors’ Association of India showed Jan. 12.

For the first two months of the Indian vegetable oil marketing year 2021-22 (November-October), soybean and sunflower oils made up 53% of India’s total vegetable oil imports, with palm oil accounting for the rest, compared with 42% a year ago, SEA said.

In December, crude palm oil imports fell to 528,143 mt, down 29% from a year ago, while soybean oil imports were up 21% to 392,471 mt and sunflower oil imports were up 10% to 258,449 mt in the same time period, according to SEA data.

India is the largest vegetable oil buyer in the world and imports about 13 million mt- 14 million mt of it annually. Of this palm oil’s share is usually around 60%-65% as it is cheaper compared to other oils and is preferred in the food service industry for its stability and shelf life. In MY 2020-21 palm oil’s share of imports was 63%.

The import of soybean oil is up, due to declining of domestic crushing, SEA said.

The national trade body also said that it expects large imports of refined bleached deodorized palm olein of around 1 million mt-1.2 million mt to arrive during the January-March quarter, replacing crude palm oil imports.

Palm loses price advantage

In October the average price difference between crude palm oil (CPO) and crude soybean oil (SBO) was $84/mt, but that narrowed to $27/mt in November and $60/mt in December, SEA data showed.

The slightly better December margin may not be enough to sway importers back to palm oil, a source told Platts. Indian importers tend to prefer soft oils if their cost margin is less than $80 to palm oil.

“A very narrow palm oil discount over soft oils (sometimes palm oil prices were even higher than soybean oil) at India CNF markets saw importers switching to more soft oil buying from palm oil to minimise the risk,” according to Anilkumar Bagani, head of research at vegetable oil brokerage Sunvin Group.

S&P Global Platts price assessments showed that physical market prices of soybean oil from Brazil briefly fell below palm oil prices in every month from October 2021 — a rare occurrence. In January, CPO FOB Indonesia was assessed at $1,330/mt while SBO FOB Paranagua was pegged at $1,323.44/mt on Jan. 10.

Palm oil prices are expected to remain elevated due to the tight supply in the first quarter of 2022 and would start to correct later, UOB Kay Hian said in a report on Malaysia’s plantation sector Jan 11. The researcher forecast that CPO prices will average at MR 3,800/mt ($907.79) in 2022.

Following news of lower-than-expected end-December stocks in Malaysia, CPO futures on the Bursa Malaysia Derivatives exchange traded close to record highs, crossing the MR 5,000/mt ($1,194.46) on Jan. 11.
Source: Platts

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