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For the first time, Indian importers have purchased palm oil from Colombia and Guatemala, after producers with surplus stocks offered cargoes at heavily discounted prices, according to four trade sources with direct knowledge of the matter.
Indonesia and Malaysia dominate global palm oil supply and are India's main suppliers, having shipped 9 million tonnes of palm oil to the country in the 2023/2024 season. Colombia and Guatemala, the fourth and sixth largest palm oil producers respectively, typically export their surpluses to Europe and North America.
Industry officials noted that rising production in these two Latin American countries, along with their ability to redirect supplies, could put pressure on benchmark Malaysian palm oil futures.
A Mumbai-based trader at a global trading firm, who declined to be named in line with company policy, said the Colombian and Guatemalan cargoes were offered at steep discounts on a free-on-board (FOB) basis, ensuring their landed cost at Indian ports remained below that of supplies from Malaysia and Indonesia. He added that Indian importers generally prefer quick shipments, and although the voyage from Latin America takes around 45 days, the discounts were attractive enough to lure buyers.
Another Mumbai-based trader said the landed cost of palm oil from Latin America at Indian ports was more than $10 a tonne cheaper than supplies from Indonesia and Malaysia. Crude palm oil (CPO) for October delivery is currently offered in India at around $1,165 a tonne on a cost, insurance and freight (CIF) basis.
Sandeep Bajoria, Chief Executive of Mumbai-based brokerage Sunvin Group, said freight costs from the Americas run at about $90 a tonne, compared with just $45 from Southeast Asia. A trader in New Delhi added that vessels would be loaded at Latin American ports in September, arriving at India's Kandla port in October.
Latin America exports about half of its 5-million-tonne palm oil output, and India's first purchases from the region could open the door to further supplies, according to Ashish Acharya, Vice President of Patanjali Foods Ltd, one of the country's leading vegetable oil importers.
Acharya added that demand for palm oil is rising and is expected to stay strong in the coming months as India's festival season approaches. The festival season begins in September, when consumption of vegetable oils for sweets and fried foods increases, before demand typically eases again during the winter months.
Source: Reuters