Palm oil's share in India's annual edible oil imports is set to fall below that of mild oils for the first time as its rising premium over soybean oil and sunflower oil prompts refiners to seek more affordable alternatives, the head of an industry body said.
Lower palm oil imports by India, the world's biggest buyer of vegetable oils, could weigh on benchmark Malaysian palm oil prices and support U.S. soybean oil futures.
“Palm oil is becoming expensive due to supply issues,” said Sanjeev Asthana, president of the Solvent Extractors’ Association of India (SEA). “So buyers are naturally shifting to soybean oil and sunflower oil,” he added in an interview with Reuters.
The country’s palm oil imports in the 2024/25 marketing year, which ends in October 2025, could fall to as low as 7.5 million metric tons. That would be the lowest level in five years, said Asthana, who is also the CEO of Patanjali Foods Ltd (PAFO.NS).
Fall in palm oil share
Palm oil is losing market share to mild oils, which are expected to account for a slightly larger volume of imports, he said.
Palm oil accounted for 56% of India's total edible oil imports in the last marketing year, but in the first three months of the current year its share fell to 43%, SEA data showed.
Impact on import prices and projections
Traders have been trading palm oil at a premium to rival oils in recent months as floods have disrupted supplies from top producers Indonesia and Malaysia. At the same time, Jakarta has also moved to increase the use of the tropical oil in biodiesel.
Asthana said the current premium for palm oil was not sustainable. When the product starts trading at a discount, likely within two months, Indian buyers will increase their imports.
Soybean oil imports this year may increase by 1 million to 1.5 million tonnes. Last year, the volume was 3.4 million tonnes. Sunflower oil imports may see a slight increase. Last year, the volume reached a record level of 3.5 million tonnes, he said.
India meets nearly two-thirds of its vegetable oil demand through foreign supplies. It buys palm oil from Indonesia, Malaysia and Thailand, while soybean oil and sun oil come from Argentina, Brazil, Russia and Ukraine.
The availability of local oils is increasing. This growth will help meet the growing demand in the country. With this, total edible oil imports are expected to remain stable at around 16 million tonnes this year, Asthana said.
Source: Rajendra Jadhav, Ashley Tang and Jamie Freed | Notícias Agrícolas
