India’s vegoil imports to slump in May-June amid Covid-19
Indian demand for vegetable oils is expected to experience a sharp decline in May-June amid demand...
Indian demand for vegetable oils is expected to experience a sharp decline in May-June amid demand destruction as the country battles a severe second Covid-19 wave, with palm oil expected to experience the largest declines from the hospitality sector.
The fresh wave of Covid-19 infections has forced India’s hospitality sector – a key consumer of palm oil – to close, while demand for soft oils – mainly consumed by households – is expected to see a more limited impact.
“Palm oil import demand is expected to slow down sharply in May and June as refiners stall buying due to lockdowns as the country tries to mitigate the devastating impact of Covid-19 infections,” Sathia Varqa, owner and co-founder at Palm Oil Analytics said to Agricensus.
Preliminary import data for April pegged total edible oils at 1.1 million mt, of which 756,000 mt corresponds to palm oil, according to Mumbai-based vegoil broker Sunvin Group, with that number set to shrink over the next two months.
Yet the expected slowdown in palm oil purchases by Indian refiners over the next months could oversoot expectations of demand destruction, causing vegoil stocks in the world’s largest edible oils buyer to shrink further.
“Indian edible oil stocks — which are mainly made up of palm oil — have just slightly improved in April y-o-y but they could plunge into deficit in June,” Varqa added.
Total inventories were last reported at just under 1.69 million mt on April 1, according to data from the Solvent Manufacturers Association of India (SEA).
Those are likely to shrink further in May due to falling imports.
Indian palm oil imports are, however, expected to rebound from July onwards on expectations of a pickup in shipments from Malaysia, as the Covid-19 situation could improve by the end of June.
“Indian palm oil imports are expected to increase 11% y-o-y to 8 million mt in the current financial year, which runs from November 2020 to October 2021, supported by a jump of 33% of palm oil Malaysian shipments to India,” Varqa said.
Sunoil already hit
Sunoil imports have already noted a sharp decline in April arrivals as tight supply from the Black Sea led to soaring prices, causing buyers to switch to more affordable alternative edible oils.
Indian imports of Ukrainian sunoil fell by nearly 34% on the month in April to 212,680 mt, according to data from the Sunvin Group, as buyers looked for alternatives.
“Very tight sunoil availability from key producing countries — Ukraine, Russia, Argentina — has resulted in very prices,” Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group, told Agricensus.
“Additionally, the crude sunoil import margin in India has not been sustainably positive,” Bagani added.
From September to April of the current season, Ukraine exported a total of 3.25 million mt of sunoil, down 7.8% on the year, industry line up data showed on Wednesday.
For eight months of the 2020/21 season, 1.2 million mt of Ukrainian sunoil were supplied to India, which is 34% of the total export volume and 17% below the level of the previous year as of the same date.