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Severe congestion at India's major edible oil import ports is pushing refiners to weigh cutting their purchases in the coming months, a development likely to weigh on global vegetable oil prices. Onshore storage tanks have run out of capacity, delaying the unloading of vessels by as much as ten days, according to agricultural consultancy UkrAgroConsult.
The most acute bottleneck is at Kandla, which handles nearly one-third of India's edible oil imports. At least nine vessels carrying approximately 300,000 tonnes of edible oils are currently waiting offshore to discharge their cargoes. Congestion has also spread to Haldia, the country's second-largest gateway for edible oil shipments.
India imported 1.54 million tonnes of vegetable oils in August, the highest monthly volume in eleven months, with a similar figure expected in September. Refiners accelerated their procurement for August and September shipments to take advantage of lower prices for prompt parcels and to prepare for an anticipated seasonal demand spike during the festival period.
However, domestic consumption has expanded more slowly than market participants expected, triggering a build-up of inventories across the supply chain. In response, Indian refiners are now planning to scale back vegetable oil purchases for October-December shipments.
A pullback from India, the world's largest vegetable oil importer, would likely lift inventory levels in major exporting countries and intensify downward pressure on global palm oil and soyoil prices. India sources most of its palm oil from Indonesia and Malaysia, while soyoil and sunflower oil imports come primarily from Argentina, Brazil, Ukraine and Russia.
Source: UkrAgroConsult