India’s palm oil imports sank to a 27-month low in May as buyers cancelled expensive cargoes of the edible oil and replaced them with cheaper soyoil and sunflower oil, six dealers told Reuters on Tuesday.
Palm oil imports by India fell to 441,000 tonnes last month, down 14% from 510,094 tonnes in April, according to average estimates from the dealers. May imports were the lowest since February 2021, the dealers added.
The drop in purchases by the world’s biggest importer of vegetable oils could weigh on palm oil prices, which are already trading near their lowest level in 30 months.
India buys palm oil mainly from Indonesia, Malaysia – the top two producers – and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.
Price-sensitive Asian buyers typically rely on palm oil because of the low cost and quick shipping times.
But the edible oil started trading at a premium to soyoil and sunflower oil over the past few months, prompting buyers to shift to the cheaper soft oils, said Sandeep Bajoria, CEO Sunvin Group, a vegetable oil brokerage and consultancy firm.
In April, buyers opted to cancel large amounts of palm oil purchases for May shipments for the first time in many years.
India’s average monthly palm oil imports in the first six months of the 2022/23 marketing year that started on Nov. 1 were 818,203 tonnes, according to the Solvent Extractors’ Association of India, up 52% from a year earlier. The trade body is likely to publish its May import data by mid-June.
India’s sunflower oil imports in May jumped 28% from a month ago to 319,00 tonnes, while soyoil imports rose 10% to 290,000 tonnes, according to an average estimate from the dealers.
‘Palm oil has been losing market share for the past few months and is unlikely to regain it unless it becomes competitive, said Rajesh Patel,’ managing partner at GGN Research, an edible oil trader and broker.
This article has been republished from The Economic Times