Biodiesel mandates bite as Indonesia loses India edible oil lead

Indonesia has ceded its long-held position as India's largest vegetable oil supplier, as rising biodiesel blending mandates absorb more of its palm oil domestically, while Argentina and Malaysia have overtaken it, pushing it to third place in marketing year 2025-26 (October-September), USDA FAS said.

Indonesia had dominated India's import market for decades because of its leading position in the global palm oil trade. Its shipments to India have been falling since 2022-23 as larger biodiesel mandates increased domestic palm oil use, the USDA FAS said in it's monthly oilseeds: world markets and trade report on Nov. 10.

India is the world's largest vegetable oil importer, and Indonesia the largest exporter. The shift shows how biofuel policy in producing countries is changing edible oil trade flows.

Indonesia's domestic palm oil consumption is forecast at 23.38 million mt in 2026-27, up from 22.83 million mt in 2025-26 and 19.13 million mt in 2022-23, while its palm oil exports are forecast to fall to 21.6 million mt in 2026-27 from 25.03 million mt in 2025-26.

The USDA lowered its 2026-27 forecast for Indonesian palm oil consumption by 350,000 mt from October but kept exports unchanged. It cut Indonesia's ending stocks to 3.59 million mt from 3.77 million mt, after raising its 2025-26 export estimate by 1.23 million mt to 25.03 million mt based on the pace of trade.

Malaysia, Thailand gain palm share

Malaysia and Thailand increased palm oil shipments to India in 2025-26, supported by stronger output than the previous year and prices that were competitive with Indonesian palm oil, USDA FAS said.

Malaysian and Indonesian palm oil export prices stayed below soybean oil over the past month and fell sharply in early November on reports of large October palm oil stocks in Malaysia, according to the report.

The USDA FAS raised its forecast for Malaysia's 2026-27 ending stocks to 2.5 million mt from 2.23 million mt.

Argentina leads on soybean oil, offsets sunflower oil

Argentina became India's largest vegetable oil supplier in 2025-26, driven by demand for soybean oil. Recent cuts to Argentine export taxes made its soybean oil more competitive, the USDA said.

New suppliers are also emerging. China is now the world's largest soybean oil exporter outside South America, helped by record crushing. Its exports are estimated at 1.08 million mt in 2025-26, up from 318,000 mt in 2024-25.

Nepal has also gained share by using duty-free access for refined oil under the South Asian Free Trade Agreement. Much of the soybean oil India imports from Nepal is Argentine oil refined in Nepal and then re-exported under preferential tariffs, the USDA said.

India also bought more sunflower oil in 2025-26, with Argentina more than offsetting lower shipments from Ukraine and Russia. Argentina has been India's main sunflower oil supplier since July 2026, and competitive prices have helped India double its purchases from the previous marketing year.

Record imports ahead

India's vegetable oil imports are forecast to reach a record 17.39 million mt in 2026-27, up from 16.85 million mt in 2025-26.

Sunflower oil imports are expected to rise to 3.85 million mt from 3 million mt as global sunflower seed supply improves.

Palm oil imports are forecast at 8.4 million mt, up from 8.1 million mt, with growth limited by global availability. Soybean oil imports are forecast to fall to 5 million mt from 5.6 million mt because less soybean oil will be available for export.

Global palm oil exports are forecast to fall to 43.75 million mt in 2026-27 from 46.76 million mt, mainly because of lower Indonesian shipments.