Rising Palm Oil Futures

Palm oil futures in Malaysia have seen a consecutive two-week surge, driven by forecasts indicating reduced production and inventories in February. However, India's pivot away from palm oil imports in favor of soybean and sunflower oil might temper the price surge.

Market Movement

May palm oil futures on Bursa Malaysia rose by 1.3% yesterday to $842/t or €772/t, marking a 1.5% increase for the week. Traders are eagerly awaiting a forthcoming statistical report, which may signal a reduction in oil reserves in Malaysia, potentially dropping to 2 million tons due to production declines.

India's Import Trends

India witnessed a substantial 35.6% decrease in palm oil imports in February, reaching a 9-month low of 504,000 tons, largely due to the escalating prices of palm oil. This decrease in palm oil imports coincides with a notable uptick in the import of sunflower oil, which surged by 34% to 295,000 tons in the same period. Logistical issues in the Red Sea have also contributed to this shift, leading to delayed arrivals of sunflower oil batches.

 Soybean and Sunflower Oil Imports

Conversely, soybean oil imports in India experienced a 7.9% decline compared to January, dropping to 174,000 tons. This figure is notably lower than the average monthly import of 306,000 tons observed in the 2022/23 marketing year.

Overall Vegetable Oil Imports

The collective volume of vegetable oil imports to India in February witnessed a substantial 18.4% decrease compared to January, plummeting to a two-year low of 973,000 tons. It's worth noting that India sources palm oil from Indonesia, Malaysia, and Thailand, while soybean and sunflower oil imports primarily come from Argentina, Brazil, Ukraine, and the Russian Federation.

Source:GrainTrade