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20 Apr 2023 | 07:50 UTC
Highlights
About 400,000 mt of palm oil demand seen shifting in next three months
Soybean, sunflower oil prices at par or lower than palm: traders
India's veg oil stocks at record high: data
India's demand for palm oil will likely ease in the second quarter on shrinking cost advantage over competing vegetable oils, along with weak domestic consumption and inventory buildup, sources told S&P Global Commodity Insights April 20.
About 100,000 mt to 150,000 mt of palm oil orders will likely shift to competing vegetable oils -- sunflower and soybean -- every month in the April-June quarter, according to Sandeep Bajoria, CEO of Mumbai-based brokerage Sunvin Group.
India is the world's largest importer of vegetable oils followed by China and palm oil accounts for more than half of its imports, as it is typically the cheapest of all veg oils.
Currently, India is buying its minimum monthly requirement of 500,000 mt of palm oil, as soybean oil costs are at par with palm oil for April and May while sunflower oil is $30/mt cheaper, Bajoria told S&P Global.
India has scaled back its palm oil imports by 400,000 mt for the April-June period and replaced it with sunflower oil, due largely to the current price spreads, reckons Lingam Supramaniam, director at Malaysia-based commodities firm Pelindung Bestari.
Supramaniam expects record high sunflower oil imports by India in the ongoing quarter and estimates palm oil inflows at around 550,000 mt in April and nearly 700,000 mt in May.
Platts assessed soybean oil Argentina FOB up river price at $955.93/mt on April 19, down 11.4% on the month, S&P Global data showed.
Meanwhile, crude palm oil FOB Indonesia price was assessed down 1.3% on the month at $965/mt on April 19, the data showed.
In the first five months of the current marketing year (November-March), vegetable oil imports rose 22% on the year to 7.06 million mt, data from trade body Solvent Extractors' Association of India, or SEA, showed April 15.
The jump in imports led to a stock build up at ports, with total vegetable oil inventories at 3.47 million mt on April 1, the highest on record, according to the SEA data.
Palm oil products accounted for 63%, or 4.4 million mt, of India's vegetable oil imports; soybean oil accounted for 21% at 1.46 million mt; and the rest was sunflower oil at 1.12 million mt in the current year, SEA said.
Currently, domestic demand is weak so palm oil imports will ease but soybean and sunflower oil buying will stay above the levels seen in the last few months, a market source told S&P Global, adding that sunflower oil imports could rise above 150,000 mt per month in Q2.
Palm oil exports from Malaysia -- India's second-largest exporter of palm oil after Indonesia -- were seen falling by more than 20% in the April 1-20 period, according to shipment data by cargo surveyors.
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