India’s Palm Oil Imports May Reach 11-Year Low Amid Rising Soyoil Prices

By Rajendra Jadhav

MUMBAI – India’s palm oil imports may decline by nearly 20% as more affordable soyoil gains market share, following Indonesia’s restrictions on palm oil exports and India’s decision to permit duty-free imports of soyoil, according to dealers.

In the marketing year ending on October 31, palm oil imports by India, the world’s largest vegetable oil buyer, are projected to decrease by 19% to 6.7 million tonnes, marking the lowest level since 2010/11 based on the average forecast from five dealers.

Conversely, soyoil imports are expected to surge by 57% to a record 4.5 million tonnes, dealers noted.

This change in import patterns could lead to downward pressure on Malaysian palm oil prices, potentially boosting soyoil imports to unprecedented levels and supporting futures prices for U.S. soyoil.

On Tuesday, the Indian government allowed duty-free imports of 2 million tonnes each of soyoil and sunflower oil for the current and next fiscal years ending March 31, aimed at stabilizing local edible oil prices.

"The current duty structure favors soyoil over palm oil," stated Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage and consultancy firm.

As of June, crude palm oil prices in India were around $1,775 per tonne (including cost, insurance, and freight), compared to $1,845 for crude soybean oil. However, with a 5.5% import tax on palm oil, the effective cost for Indian buyers rises to $1,873, Bajoria added.

In the first half of the marketing year, India’s palm oil imports fell by 15% to 3.23 million tonnes, influenced by Indonesia’s export restrictions which tightened supplies and raised prices.

Jakarta recently resumed palm oil exports after a three-week ban, but industry representatives indicated shipments may not bounce back until clarity emerges on domestic supply requirements.

"We had anticipated an increase in palm oil imports during the second half, but ongoing Indonesian policies are hindering exports. Buyers now have valid reasons to avoid palm oil," remarked a New Delhi-based dealer with a global trading firm.

India primarily sources palm oil from Indonesia and Malaysia, while most of its soyoil comes from Argentina, Brazil, and the United States.

Sunflower oil is predominantly imported from Russia and Ukraine, although further increases in imports appear unlikely in the coming months unless the geopolitical landscape in the Black Sea region improves, according to the New Delhi dealer.

Estimates suggest India will import 1.9 million tonnes of sunflower oil this year, consistent with the previous year’s figures.