InfoSAWIT, NEW DELHI - India's palm oil imports in December 2024 reached their lowest point in nine months. The surge in palm oil prices to a two-and-a-half-year high prompted processors to switch to cheaper soybean oil, according to five traders.

The decline in palm oil imports by India, the world's largest vegetable oil buyer, could pressure benchmark palm oil prices in Malaysia. However, it is expected to support U.S. soybean oil prices.

Palm oil imports plummeted by 40% in December compared to the previous month, totaling 503,000 metric tons, the lowest amount since March 2023, according to estimates from traders. Meanwhile, soybean oil imports increased by 3% from the previous month to 420,000 metric tons, the highest in four months. On the other hand, sunflower oil imports fell by 22% to 265,000 metric tons.

The drop in palm oil and sunflower oil imports resulted in a total decline of 25% in India's vegetable oil imports in December, amounting to 1.19 million tons, the lowest in three months, based on traders' estimates.

"Indian buyers are actively switching from palm oil to soybean oil after the price premium of palm oil over soybean oil surged in November and December," said Rajesh Patel, managing partner at GGN Research, a vegetable oil trader, as quoted by InfoSAWIT from The Economic Times on January 4, 2025.

Typically, palm oil is traded at a lower price compared to soybean and sunflower oils. However, dwindling stocks have pushed palm oil prices higher than those of competing vegetable oils, which are more abundantly supplied.

"Currently, palm oil has a premium of over USD 100 per ton compared to soybean oil. This will encourage Indian buyers to continue reducing imports in January," said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage firm.

The Solvent Extractors' Association of India is expected to release official data on December imports in mid-January. India primarily imports palm oil from Indonesia, Malaysia, and Thailand, while soybean and sunflower oils are sourced from Argentina, Brazil, Russia, and Ukraine. (T2)