India’s palm oil imports to hit 5-year low on negative margins, say sources

MUMBAI: India’s palm oil imports are set to plunge to a near five-year low in January, hit by negative refining margins as the tropical oil’s premium over rivals drives buyers to more competitively priced soy oil, government and industry officials told Reuters.

Lower palm oil imports by the world’s biggest buyer of vegetable oils could weigh on benchmark Malaysian palm oil prices, but support US soy oil futures.

“About 110,000 tonnes of palm oil were cleared in the first half of January, which is a pretty small amount compared to the usual monthly imports,” said a government official, who sought anonymity as he was not allowed to speak to media.

The thin line-up of vessels carrying palm oil at key ports such as Kandla, Haldia, and Krishnapatnam over the next two weeks suggests imports could drop to about 370,000 tonnes in January, said a leading Indian palm oil buyer.

India imported an average of more than 750,000 tonnes of palm oil every month in the marketing year that ended in Oct 2024, says trade body the Solvent Extractors’ Association of India, which is set to publish its January import data by mid-February.

India imported 782,983 tonnes of palm oil in January 2024.

“Everyone in the industry has been cutting down palm oil purchases due to negative refining margins,” the Indian buyer said.

Two vegetable oil brokers and a shipping company, which compiles data on vessels lined up to unload at ports, estimated that imports could range between 340,000 tonnes and 370,000 tonnes.

In the second half of January, more palm oil is expected to be unloaded at west coast ports than in the first half, but total monthly imports are still unlikely to exceed 370,000 tonnes, said an official with a Mumbai-based shipping company.

This would be the lowest since March 2020, when New Delhi’s unofficial curbs on imports from Malaysia reduced shipments.

Refiners are incurring losses of more than US$30 a tonne in palm oil refining for January shipments, and the oil is available at even lower prices for February and March shipments, said Rajesh Patel, managing partner at GGN Research, an edible oil trader.

Crude palm oil (CPO) is now being offered in India at about US$1,155 a tonne, including cost, insurance and freight (CIF) for January delivery, while February and March shipments were offered at US$1,140 and US$1,100, dealers said.

Soy oil, which traditionally commands a premium over palm oil, is now offered at a discount to palm, said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage.

“Buyers are moving to soy oil from palm oil,” Bajoria added.

“This trend is likely to continue unless palm oil corrects and becomes available at a discount.”

India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soy oil and sunflower oil from Argentina, Brazil, Russia and Ukraine.