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November 30, 2023

India creates record by purchasing 100,000 tonnes of US soyoil from drought hit South America

By Priti Naik

The Indian traders have imported a record 100,000 tonnes of soyoil from the United States. This comes because of limited supplies from drought-hit South America especially when prices of rival palm oil are scaling high. The world’s biggest edible oil importer traditionally buys soyoil from Argentina and Brazil, but lower bean output in these two leading exporters of the commodity forced India to turn to the United States.

India usually gets two-thirds of its soyoil needs from Argentina, and the rest from Brazil. But last season’s reduced soybean output has tightened soyoil reserves in Argentina, forcing Indian buyers to shop around for alternatives, such as sunoil from the Black Sea region. Crude palm oil (CPO) is being offered at about $1,575 a tonne, including cost, insurance and freight (CIF), in India for March shipments, compared with $1,620 for crude soybean oil and $1,515 for crude sunflower oil.

Soyoil was cheaper than palm and sunflower oil last month, but the sudden jump in soyoil demand has lifted prices by 16% in a month to the highest in 14 years. India gets nearly two-thirds of its edible oil needs through imports, mainly palm oil from Indonesia and Malaysia.

But Indonesia’s decision to curb palm oil exports has lifted the price of the tropical oil to a record and created scarcity in the edible oil market, said a Mumbai-based dealer with a global trading firm.

Top soyoil exporter Argentina also faces a drop of 5 million tonnes in soybean output for 2021-22. In addition, lower water levels on Argentina’s key Parana River have left it struggling to fully load soybean vessels, so that cargo sizes have been reduced by up to 30%. On the other hand, the United States faces a potential surplus of soyoil after the Biden administration proposed cutting the biofuel blending mandate, another dealer with a trading firm said.

India could import as much as 160,000 tonnes of soyoil from the United States in 2021/22, up from 36,000 tonnes a year ago, he said. Indian traders also signed deals to import 30,000 tonnes of soyoil from the Black Sea region, but port congestion is delaying shipments, said the India head of a global trading firm.

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