Fri. Dec 3rd, 2021

India’s vegetable oil imports are set to rise to 14 million mt in the marketing year 2021-22 (November-October), driven largely by a pickup in sunflower oil imports, Sandeep Bajoria, CEO of Mumbai-based vegetable oil broking firm Sunvin Group said Nov. 3.

Sunflower oil imports are expected to rise to 2.4 million mt in MY 2021-22 from an estimated 1.88 million mt in 2020-21, as a steep cut in import duty combined with better global production will bring its prices closer to palm and soybean oils, Bajoria said.
India is the largest importer of vegetable oils in the world and has slashed its import tax on edible oils thrice in as many months amid rising international prices to keep domestic food inflation in check. The last import duty cut was announced Oct. 13.

Post the latest cut, imports of crude sunflower oil are taxed at 5%, same as soybean oil and lower than the 7.5% charged on the crude palm oil. While palm oil is still the cheapest of oils due to its price advantage at origin markets, a record sunseed crop in Ukraine and Russia is narrowing the gap, according to Bajoria.

“We project World 2021/22 Sunflower seed production at 56.5 million mt, up 6.5 million mt from 2020/21. The increases are from Ukraine, Russia, EU and Argentina,” Bajoria said.

Bajoria added that erratic weather, changes in the Russian export taxes on sunflower seed and oil, as well as slow farmer selling could pose challenges to the sunseed crop.

As of Nov 1, the price of sunflower oil FOB Black Sea Ukraine was $1,370/mt while crude palm oil FOB Indonesia was at $1,347.5/mt, a price difference of $22.5/mt, assessments by S&P Global Platts showed. A year ago, the price difference was $202.5/mt

In terms of cost at the destination, the average cost of importing a mt of crude sunflower oil was $1,460 in Mumbai, India while crude palm oil cost $1,455 as of Oct. 29, a press release by national trade body, the Solvent Extractors’ Association of India said.

At these rates, total duty paid on crude sunflower oil is Rupee 6,003.36/mt ($80.59), lower than the duty of Rupee 7,748.09/mt ($104.01) paid on crude palm oil, trade sources told Platts. Sunflower oil also commands a much higher price in the domestic retail market than palm oil.

While directly importing refined palm oils is currently the cheapest option, as per New Delhi’s edible oil policy, imports of refined palm oils such as RBD palm olein or refined, bleached and deodorized palm olein are unrestricted only till Dec. 31.

In MY 2021-22, India’s imports of palm oil may shrink to 8.375 million mt from 8.66 million mt in 2020-21, Bajoria said.

In Q4 of the calendar year 2021 (October-December), Indian palm oil imports are expected to average around 600,000 mt monthly, with soybean oil at 375,000 mt and sunflower oil at 180,000 mt, according to estimates by the Sunvin Group.

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