India’s Sunflower Oil imports expected to decline amid price rally and shipping disruptions
Traders have indicated that India’s sunflower oil imports are poised to decrease in the upcoming months due to a surge in prices, primarily driven by a notable increase in freight rates. The country, being the world’s largest sunflower oil buyer, traditionally sources a significant portion of its imports from the Black Sea region via the Red Sea. However, recent Houthi attacks have compelled shipping companies to reroute trade between Europe and Asia around Africa, leading to extended transit times and increased costs.
The elevated freight rates have resulted in the landed cost of sunflower oil surpassing that of soyoil in India for the first time in nearly a year. Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage, stated that the advantageous pricing of sunoil over soyoil had led to robust imports in recent months. However, this advantage has diminished due to the rising freight costs.
Crude sunflower oil imports are currently offered at about $943 a tonne, including cost, insurance, and freight (CIF), for February delivery in India. In comparison, crude soyoil is priced at around $935, and crude palm oil at $933. Two months ago, sunflower oil was trading at a $120 per ton discount to soyoil, prompting an increase in sunoil imports.
In December, India witnessed a more than doubling of sunoil imports from the previous month, reaching 260,850 tons. However, soyoil imports in December rose by 1.8% to 152,650 tons but remained below the average imports of 306,000 tons in the marketing year ending in October 2023.
Rajesh Patel, managing partner at edible oil trader and broker GGN Research, anticipates a potential decline in sunflower oil imports to around 225,000 tons in January, with soyoil imports likely to surpass 230,000 tons. If the current pricing trend continues, Patel suggests that sunflower oil imports could further decrease to around 200,000 tons in the coming months.
India primarily sources palm oil from Indonesia, Malaysia, and Thailand, while soyoil and sunflower oil imports come from Argentina, Brazil, Russia, and Ukraine. Argentina is presently offering sunoil at more competitive prices than supplies from the Black Sea region, leading to potential adjustments in India’s oil import preferences.