Rising Sunflower Oil Imports
India’s record import of 500,000 tons of sunflower oil for June has put significant pressure on soybean and palm oil prices. Increased competition between major exporters Ukraine and the Russian Federation, which together account for over 70% of global sunflower oil exports, has driven sunflower oil prices lower than those of soybean and palm oil.
Impact on Global Markets
The surge in sunflower oil supplies to India, the world’s largest importer of vegetable oils, is expected to reduce reserves in the Black Sea region, potentially leading to higher prices. In June, crude sunflower oil for delivery to India was offered at $940/t CIF (Cost, Insurance, and Freight), while soybean oil was priced at $1,015/t CIF and palm oil at $950/t CIF.
Seasonal Purchase Patterns
In the previous season, India imported an average of 250,000 tons of sunflower oil each month, primarily from the Black Sea region. However, processing the 500,000 tons delivered in June will take time, likely reducing imports in July. Typically, India sources palm oil from Indonesia, Malaysia, and Thailand, and soybean oil from Argentina, Brazil, and the USA.
Price Movements and Market Dynamics
On the Chicago exchange, July soybean oil futures fell by 1.6% to $942/t, a 2.6% decline from the beginning of the week, driven by favorable weather in the US and expectations of increased soybean planting. Meanwhile, August palm oil futures on Malaysia’s Bursa exchange have decreased for three consecutive sessions, falling 1.1% to a six-week low of 3,856 ringgit/t, or $820/t, due to weak exports and higher inventory forecasts.
International Tendencies and Future Outlook
The Egyptian General Authority for Supply Commodities (GASC) recently canceled an international tender for vegetable oils due to high bid prices, opting instead to purchase 25,000 tons of soybean oil domestically at $973/t.
Fitch Ratings forecasts a decline in global palm oil prices in the second half of the year, attributed to increased oil supply from higher rainfall in Indonesia’s agricultural regions. After reaching $950/t in early April 2024, spot prices have slightly decreased, and Fitch experts predict an average price of $775/t by the end of 2024.
The increase in sunflower oil imports to India is reshaping the global vegetable oil market, highlighting the interconnectedness of international trade and domestic consumption patterns. As the market adapts to these shifts, stakeholders should remain vigilant, monitoring price trends and adjusting strategies accordingly to navigate the evolving landscape.