Palm Oil Softens as India Cuts Imports and Mustard Steps In
Palm oil prices face headwinds as India’s edible oil imports fall and domestic mustard supplies rise, while El Niño and biodiesel demand limit downside.
Prices
High global vegetable-oil prices and freight disruptions have reduced India’s import pull, weighing on palm oil. June palm-oil imports into India slipped around 10.5% month-on-month to about 492,000 MT, helping to ease the recent tightness in destination stocks.
In India’s domestic market, mustard in Rajasthan is quoted around EUR 74–76 per quintal (converted from USD 80.80–82.87), with Jaipur 42% condition mustard near EUR 79 per quintal. These levels remain competitive versus imported soft oils and limit palm oil’s ability to push significantly higher in India without a fresh catalyst.
Supply & Demand
India’s edible-oil imports have reportedly declined by about 16.6% so far this financial year, as high international prices and shipping issues deter buying. Within this, June saw palm oil down 10.5% to roughly 492,000 MT, soybean oil down 23% to around 381,000 MT and sunflower oil down 17.5% to about 244,000 MT.
Lower seaborne arrivals have pushed domestic crushers to run more mustard, drawing down mandi stocks and improving local oil availability. At the same time, regional data show India’s palm oil imports in June at a 14‑month low, reflecting softer foodservice demand and a narrower price discount of palm versus soft oils, which also curbs incremental demand for palm at the margin.
Fundamentals & Weather
Fundamentally, the slowdown in Indian imports removes a key demand driver just as Southeast Asia faces mixed supply signals. Analysts expect Malaysian and Indonesian output growth to moderate in 2026–27, with tighter balances as El Niño develops and biodiesel mandates (including Indonesia’s move toward higher blending and Malaysia’s B15) absorb more barrels.
Meteorological agencies in the region now flag increasing El Niño odds from July 2026 into early 2027, raising the risk of drier conditions in key palm belts of Malaysia and Indonesia. While immediate yield effects are limited, market participants are starting to price in potential supply stress for 2026–27, constraining significant downside in forward palm oil values.
Forecast & Trading Outlook
The base case is for a broadly range-bound palm oil market in the near term: softer Indian import demand and ample domestic mustard stocks lean moderately bearish, while weather and biodiesel policy risks lend underlying support. The report suggests mustard prices could rise by about EUR 0.05 per kg (EUR 5 per quintal) if oil-mill demand strengthens, which would tend to lift competing soft oils, including palm, at the margin.
- Importers in India: Use current demand softness to secure nearby palm oil coverage on dips, but avoid overstocking given domestic mustard competitiveness and weaker foodservice demand.
- Crushers and refiners: Maintain a bias toward domestic mustard crushing while monitoring spreads; a sustained EUR 5/quintal rise in mustard would justify gradually shifting a portion of demand back to imported palm.
- Hedgers and funds: Consider light long positions on significant breaks, as El Niño and expanding biodiesel mandates could tighten balances into 2027.
3‑Day Directional View (EUR-based)
- Rotterdam palm oil (CIF, EUR terms): Mild downside to sideways as Indian import demand remains muted and nearby stocks are comfortable.
- India landed RBD palm olein (EUR terms): Largely stable; domestic mustard values and limited restocking cap both downside and upside.
- Mustard oil, North India (ex-mill, EUR terms): Slight upward bias if crushers step up purchases, supporting a modest firming in the overall edible-oil complex.