India's Feb vegetable oil imports fall to near 2-year low on declining palm oil purchases

India's vegetable oil imports fell to 967,852 mt in February, down 19% on the month to the lowest single month of purchases since June 2022, trade body the Solvents Extractors' Association of India, or SEA, said March 13.

Imports from the world's biggest vegetable oil buyer were last at this low level in June 2022 after war broke out between Russia and Ukraine which pushed vegetable oil prices to record highs along with shocks to Black Sea supply chains(opens in a new tab).

In February, India's palm oil imports fell to 497,824 mt from 782,983 mt in the month before and the lowest in nine months, SEA said March 13, as unfavorable price margins turned buyers to competing sunflower oil in the month.

Crude palm oil and refined palm oil are usually cheaper than soft oils such as sunflower and soybean oils and comprise a majority of India's total vegetable oil purchases, according to the historical trade data.

"The availability of palm oil for edible oil requirements has come down as the main two producers Malaysia and Indonesia are diverting it for the production of biodiesel," SEA said March 13, adding that "this may result in an increase in prices this year."

For the month of February, the average crude palm oil price on a CIF basis to an Indian port was at $933/mt compared with crude sunflower oil at $920/mt and crude soybean oil at $924/mt, SEA data showed.

February sunflower oil imports rose to 297,092 mt from 220,079 mt in January, while soybean oil purchases fell to 172,936 mt from 188,859 mt a month before, according to the SEA.

"In local (India) markets palm oil is still cheapest and can be sold off within days, meanwhile it takes a month or so to sell off sunflower and soybean oils, so demand for palm oil is still hot domestically," a trader told S&P Global Commodity Insights March 13.

The overall import of vegetable oils during the first four months of the marketing year 2023-24 (November-October) was reported at 4.65 million mt, down 21% compared to 5.89 million mt during the same period of last year.

Port stocks of vegetable oils fell to 622,000 mt on March 1, down to its lowest level in more than a year, SEA said.

Platts, part of S&P Global, assessed crude palm oil CFR West Coast India at $990/mt March 12, up 3.8% since the start of the month.