MUMBAI – India’s appetite for edible oils reached new heights in August as the country’s imports surged by 5%, totaling a historic 1.85 million metric tons. This unprecedented spike in imports was driven primarily by refiners’ aggressive purchases, with over 1 million tons of palm oil being procured for the second consecutive month. The purpose behind this buying spree is to stock up in anticipation of upcoming festivals, according to information shared by four industry insiders with Reuters.
India, the world’s largest importer of vegetable oils, could potentially impact palm oil stocks in Indonesia and Malaysia while providing support to benchmark futures. The ripple effect of India’s buying has already started to strengthen soybean oil futures and could contribute to reducing inventories in sunflower oil-producing Black Sea countries.
The data shared by the Solvent Extractors’ Association of India (SEA) reveals that India’s average monthly edible oil imports in the 2021/22 marketing year stood at 1.17 million tons. July marked another milestone as India imported a record-high 1.76 million tons of edible oils.
Palm oil imports, in particular, soared from 1.09 million tons in July to 1.12 million tons in August, marking the highest level in nine months, as per the estimates provided by industry experts.
Rajesh Patel, the managing partner at GGN Research, an edible oil trader and broker, commented on the situation, saying, “Refiners were making aggressive buying for the upcoming festival season. Retail demand was moderate, but the industry is expecting it would pick up in the coming months.”
Notably, sunflower oil imports experienced a significant 11.5% increase from the previous month, reaching 365,000 tons, the highest in seven months. Similarly, soy oil imports edged up by 3.7% to 355,000 tons, based on industry estimates.
The expanding price gap between palm oil and soy oil, along with sunflower oil, has motivated refiners to boost their purchases in anticipation of heightened demand during the approaching festival season. Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage, commented on this trend, emphasizing that “As the discount of palm oil relative to soy oil and sunflower oil continues to widen, refiners are increasing their purchases in anticipation of demand during the upcoming festivals.”
India traditionally sources palm oil from countries like Indonesia, Malaysia, and Thailand, while soy oil and sunflower oil are imported from Argentina, Brazil, Russia, and Ukraine.
Adding to the surge in imports, a New Delhi-based dealer with a global trading house explained that a few vessels initially intended for unloading in July at Kandla port were eventually offloaded in August due to port congestion.
Moreover, concerns regarding local soybean and groundnut production due to the dry weather are further prompting refiners to import more edible oils, according to industry insiders. India endured its driest August in over a century, with the country receiving a stark 36% less rainfall than usual during the month.
The Solvent Extractors’ Association of India is expected to release its August vegetable oil import data by mid-September, shedding further light on the dynamics of the edible oil market in the country.