Indian Refiners Cancel Soybean Oil Import Orders for December and January as Global Prices Jump

Four trade sources told Reuters that Indian refiners canceled contracts to import about 70,000 metric tonnes of crude soybean oil that had been scheduled for delivery between December and January.

The cancellations came as global prices rose and the local currency, the rupee, weakened, making domestic soybean oil cheaper than imported supplies.

Refiners in India, the world’s largest vegetable oil importer, canceled the orders as global soybean oil prices jumped to their highest level in four months and the rupee fell to a record low, making locally produced soybean oil more competitive than imported supplies.

A New Delhi-based trader working with a global trading company said: “There is a huge gap in soybean oil import prices, and refiners now expect losses of more than $70 per tonne on imported oil.”

He added: “As a result, many are canceling import contracts they signed in September.”

Key Points and Prices

• Local vs imported price: Refined soybean oil is trading at around 124,700 rupees, or $1,387.25, per tonne in the local market, compared with nearly 132,100 rupees per tonne for imported supplies.
• Currency decline: The rupee fell to a record low of 90.42 on Thursday.
• Contract background: Indian buyers booked crude soybean oil shipments in September at between $1,100 and $1,120 per tonne, including cost, insurance, and freight, after Argentina, the main supplier, removed export taxes.
• Price jump: Soybean oil prices this week rose to around $1,230 per tonne, tracking gains in Chicago soybean oil futures.

The price increase prompted Indian refiners to cancel contracts priced between $1,150 and $1,170 per tonne, saving them more than $30 per tonne, according to the sources, who spoke on condition of anonymity.

An Indian buyer operating a refinery on the east coast, who canceled January shipments, said refiners reached settlements with sellers by accepting prices slightly below the current market level.

The Solvent Extractors’ Association of India did not immediately respond to requests for comment on the cancellations.

Shift to Alternatives

• Crude soybean oil is currently offered in India at around $1,220 per tonne for January delivery, compared with around $1,140 a month earlier.
• A Mumbai-based trader said palm oil is currently trading at a discount of more than $100 per tonne compared with soybean oil, prompting refiners to cancel soybean oil contracts and shift to the cheaper alternative.

India buys palm oil mainly from Indonesia and Malaysia, while soybean oil and sunflower oil are sourced from Argentina, Brazil, Russia, and Ukraine.

Source: Reuters