Indian refined sunflower oil volumes are anticipated to experience an 8-10% decrease in FY25 due to a downturn in sunflower oil demand.
As per a report by CRISIL Ratings, domestic consumers have returned to soybean oil after the prices have declined following a good soy harvest.
Despite this shift, the report underscores that sunflower oil refiners are poised to see a 50-60 basis points expansion in profitability. This growth can be attributed to stable prices, effective hedging policies, and the government’s pledge to maintain duty-free imports.
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Director of CRISIL Ratings Jayashree Nandakumar stated, “With an excellent harvest, the cost of soybean oil is likely to correct by USD 100 per tonne on-year and be on par with sunflower oil in fiscal 2025. Sunflower oil volume will drop from 32 lakh tonne in fiscal 2024 to 28–29 lakh tonne in fiscal 2025 as a result of the consumer shift towards soybean oil, although it would still be greater than the historical average of five years through fiscal 2024.”
Despite the projected decrease in volumes, the report indicates that refined sunflower oil prices are poised to remain stable. This stability is attributed to elevated shipping and freight expenses amidst the prevailing geopolitical uncertainties in the Middle East.
“Despite the growth slowdown, refiners’ profitability is expected to rise by 50–60 basis points due to favourable spreads brought on by robust demand and minimal price volatility. To further reduce negative price risks, refiners have put in place strong hedging procedures,” according to CRISIL Ratings Associate Director Rishi Hari.
In the Indian edible oil market, palm oil holds the largest share, accounting for roughly 40 percent of total volumes, trailed by soybean oil and sunflower oil, which claim shares of 20 percent and 15 percent respectively. The demand for sunflower oil is closely intertwined with the pricing dynamics of its alternatives, particularly palm oil and soybean oil.
India possesses substantial sunflower oil refining capacities and relies on imports for over 95 percent of its crude sunflower oil needs. Although refined sunflower oil is primarily consumed domestically, its price fluctuations are heavily influenced by the movement of imported crude oil prices.
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