by Rajendra Jadhav
MUMBAI (Reuters) – Indian refiners have been slashing purchases of palm oil and increasing imports of soy oil and sunflower oil after a sharp rise in palm oil reduced their discount to rivals, industry officials told Reuters.
Reduced purchases by the world’s biggest edible oil importer could weigh on palm prices, which fell 10% from the record highs reached last month. But the move could support US soybean oil futures.
“Refineries generally prefer palm oil, as it is traded at a substantial discount for soy and sunflower oil. As there is almost no price difference now, they are switching to soybean oil and sunflower oil,” said Govindbhai Patel, managing director of trading company GG Patel & Nikhil Research Company.
Traditionally, palm oil accounts for two-thirds of India’s annual edible oil imports, ranging from 13 to 15 million tonnes.
But Indian refiners are scaling back palm purchases after importing a record 1.26m tonnes of palm oil in September as the spread between palm oil and soybeans narrowed to $20 a ton from $120 a year ago, traders said.
Crude palm oil is being offered at around $1,395 a ton, including cost, insurance and freight (CIF), in India for December shipments, compared to $1,415 for crude soybean oil and $1,445 for sunflower oil gross, according to traders.
The narrowing gap has made buyers switch to soy oil, which is considered superior in flavor and quality to palm oil.
India buys palm oil from Indonesia and Malaysia, and soy oil is imported mainly from Argentina and Brazil, while sunflower oil from Russia and Ukraine.
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