India’s palm oil imports in March saw a significant increase of 28% compared to the previous month’s eight-month low in February, according to information provided by five dealers to Reuters. This was due to refiners curtailing purchases of soy oil and sun oil and choosing palm oil, which was available at discounted prices.
According to traders, India’s surge in palm oil imports, as the world’s biggest importer of vegetable oils, could be beneficial for Malaysia in reducing its stocks, which in turn could support the prices of palm oil.
Based on estimates provided by the dealers, India’s palm oil imports reached 750,000 tonnes in the last month, increasing from 586,007 tonnes imported in February.
Sandeep Bajoria, the CEO of vegetable oil brokerage Sunvin Group, stated that palm oil imports increased in March due to the oil being traded at a discount of over $150 to soy oil and sun oil in the previous month and the first half of March. This prompted refiners to raise their purchases.
The dealers stated that soy oil imports in March decreased by 27% to 259,000 tonnes, whereas sunflower oil imports dropped by 4% to 150,000 tonnes, the lowest in five months.
Rajesh Patel, the managing partner at GGN Research, explained that soy oil imports declined because the premium of soy oil over palm and sun oil has been increasing, which is attributed to a drought in Argentina.
Argentina, the largest exporter of soy oil in the world, could see a drop in soybean production from an initial estimate of 48 million tonnes to 25 million tonnes in the 2022-2023 crop cycle. This is due to the drought affecting yields and causing a decrease in production.
India mainly imports palm oil from Indonesia, Malaysia, and Thailand, while it procures soybean and sunflower oil primarily from Argentina, Brazil, Russia, and Ukraine.
A Mumbai-based dealer associated with a global trade house has indicated that the discount of palm oil to its rivals has fallen below $70 per tonne from as high as $500 in the December quarter, and this is likely to result in a decrease in palm oil imports during April and May.
“Refiners are shifting to sun oil. We could see a good amount of sun oil landing in April and May,” the dealer said.