As top exporters of sunflower oil, Russia and Ukraine, seek to reduce stockpiles, India’s imports of sunflower oil are set to rise to a record 473,000 metric tonnes in January 2023, nearly tripling the average monthly imports.
Record imports by India, the world’s biggest vegetable oil importer, come as Sun Oil’s discount to rival soy oil broadened to the highest level in nine months.
The import surge will help key Black Sea producing countries reduce their stocks, but it could dampen India’s palm oil imports and weigh on Malaysian palm oil prices.
“Sun oil was trading at a discount to soy oil in December. “The discount made it lucrative for Indian buyers,” said Rajesh Patel, managing partner at GGN Research. In the last week of November and early December, the soybean oil discount to soy oil widened to around $100 per tonne, the highest since February 2022, as warring producers Russia and Ukraine attempted to ship more after a deal to provide safe passage to Black Sea shipments was extended.
The deal allowed exporters to move stuck stockpiles and sign new contracts as well, said Sandeep Bajoria, president of the International Sunflower Oil Association.
The Black Sea accounts for 60% of world sun oil output and 76% of exports. In the 2021/22 marketing year, which ended on October 31, India’s monthly sun oil imports averaged around 161,000 tonnes. Russia is currently offering sunflower oil at competitive prices to liquidate stocks, while Ukraine is selling sunflower seeds along with oil as it is struggling to crush all available seeds due to logistical issues.
Ukraine has been selling seeds to Romania and Bulgaria, which are processing seeds and exporting oil to India, and India’s decision to allow duty-free imports of sun oil until March 2024 is also making sun oil buying attractive for Indian refiners, said a leading Indian vegetable oil importer.