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India's domestic vegetable oil sector is bracing for a potential production decline of 5% to 10% in the 2026/27 marketing year, driven by adverse weather patterns including drought in key soybean cultivation zones. Simultaneously, the lingering impact of El Niño on oil palm yields across Southeast Asia is expected to squeeze global vegetable oil availability starting in late 2026 and persisting through 2027.
According to Mukesh Tailor, a commodity market analyst registered with the Securities and Exchange Board of India (SEBI), drought-like conditions in parts of Maharashtra—a critical hub for soybean production—are likely to weigh heavily on total output. Speaking to NDTV Profit, Tailor noted that while the weather risks remain significant, adequate rainfall in the Malwa region of Madhya Pradesh is providing a partial buffer against the broader environmental challenges.
The biological lag of El Niño means its full impact on palm oil production typically manifests 8 to 12 months after the event, as prolonged moisture deficits hinder the development of oil palm fruit bunches. Consequently, reduced yields are projected to tighten international markets in late 2026. Thomas Mielke, Executive Director of Oil World, reinforced these concerns at the Globoil India 2026 conference, warning that global vegetable oil prices are poised for an upward trend as supplies become increasingly constrained.
As the world's preeminent importer of vegetable oils, India's market balance remains sensitive to these shifts. Data cited by NDTV Profit shows that India’s annual consumption exceeds 25 million tons, far outstripping the domestic production estimate of approximately 9.6 million tons for the 2025/26 season. In the 2024/25 marketing year, imports surpassed 16 million tons with a total cost of $17.59 billion. Palm oil sourced from Indonesia and Malaysia currently represents 54% to 55% of these import volumes.
The convergence of lower domestic yields and a restricted global supply chain could significantly inflate India’s import bill by 2027. Mielke further identified additional systemic risks, including potential disruptions to sunflower oil shipments from the Black Sea region and a decrease in soybean oil exports from South American producers.
Source: UkrAgroConsult