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India’s palm oil imports are expected to fall to their lowest level in five years in January, pressured by negative refining margins as the wide price gap between palm oil and rival oils pushes buyers toward cheaper soybean oil, government and industry officials told Reuters.
Lower palm oil imports by the world’s largest vegetable oil importer could pressure benchmark Malaysian palm oil prices, while supporting US soybean oil futures.
A government official said around 110,000 metric tonnes of palm oil had been cleared in the first half of January, a very small volume compared with normal monthly import levels.
The limited number of palm oil vessels expected at major ports such as Kandla, Haldia, and Krishnapatnam over the following two weeks suggests imports may fall to around 370,000 metric tonnes in January, according to a leading Indian palm oil buyer.
India imported an average of more than 750,000 tonnes of palm oil per month during the marketing year that ended in October 2024, according to the Solvent Extractors’ Association of India. January 2024 palm oil imports stood at around 782,983 tonnes.
The buyer said the entire industry is reducing palm oil purchases because of negative refining margins.
Further Import Declines Expected
Two vegetable oil brokers and a shipping company that tracks vessels scheduled for discharge at ports estimated that January imports could range between 340,000 and 370,000 tonnes.
A Mumbai-based shipping official said more palm oil is expected to be discharged at west coast ports in the second half of January than in the first half, but total monthly imports are still unlikely to exceed 370,000 tonnes.
That would be the lowest level since March 2020, when informal restrictions by New Delhi on imports from Malaysia reduced shipments.
Reasons Behind the Decline
Refiners are losing more than $30 per tonne on January palm oil shipments, while the oil is available at lower prices for February and March shipments, according to Rajesh Patel, managing partner at edible oil trader GGN Research.
Crude palm oil is currently being offered in India at around $1,155 per tonne, including cost, insurance, and freight, for January shipments. February and March shipments are being offered at $1,140 and $1,100 per tonne, respectively.
Soybean oil, which traditionally trades at a premium to palm oil, is now being offered at a lower price, said Sandeep Bajoria, CEO of vegetable oil brokerage Sunvin Group.
Bajoria said buyers are switching to soybean oil instead of palm oil, adding that this trend may continue unless palm oil prices correct and return to a discount.
India mainly imports palm oil from Indonesia, Malaysia, and Thailand, while soybean oil and sunflower oil are sourced from Argentina, Brazil, Russia, and Ukraine.
Source: Reuters