India's purchases of Russian sunflower oil pick up in March amid Ukraine's absence

Indian vegetable oil buyers are set to receive about 30,000-40,000 mt of Russian-origin sunflower oil in March with shipments from largest supplier Ukraine still stuck at ports due to the war, traders told S&P Global Commodity Insights March 23.

"Buyers are not confident about banking sanctions but one vessel of around 15,000-18,000 mt of SFO has been loaded for India, and one more is expected to load at end-March," said Mukesh Goyal, head of India business at Singapore-based commodity company Saveraa International.

With Russia's invasion of Ukraine scuttling the country's port capacities since the last week of February, about 360,000 mt of Ukrainian SFO meant for Indian shores is currently stuck at ports, sources said.

India imported 715,934 mt SFO from Ukraine and 121,323 mt from Russia in the first four months of India's vegetable oil marketing year 2021-22 (November-February), according to data from trade body Solvent Extractors' Association of India March 14.

In February, about 152,000 mt SFO arrived in India and a similar quantity is likely to arrive in March, the SEA had said at the time.

However, Ukraine's SFO exports have not completely stopped, with the war-struck country exporting small quantities through land routes.

"Last Friday, a shipment of 6,000 mt went to Italy from Izmail port, with stocks being moved by train and truck," a Black Sea trader told S&P Global, adding that farmers are reluctant to move stocks over land routes regularly due to the risks involved.

Demand surges for domestic oils

More and more domestic buyers are not keen on importing palm oil and may manage to fill the supply gap with local mustard, rice bran, groundnut and blended edible oils, trade sources said March 23.

"Everyone is focused on mustard now. Usually refined palm oil (known as RBD palm olein) trades at a discount of INR 200/kg-INR 400/kg ($2.62-$5.23) to mustard oil but now refined mustard oil price is lower than olein for a month," said Aditya Jeripotula, head of research at Hyderabad-based TransGraph Consulting.

The local rate for edible rapeseed oil (mustard oil) was Rupees 153,000/mt ($2,001.70/mt) in the week ended March 17, down 7% on the month, showed SEA price data published March 21.

Meanwhile, RBD palm olein imports also costed Rupees 153,000/mt in the week, though the price rose 18.6% from a month earlier as international vegetable oil markets priced in supply cuts from Ukraine, Argentina and Indonesia -- the largest exporters of sunflower oil, soybean oil and palm oil, respectively.

"Banks in India are asking questions for opening LC [letters of credit] to Russian-origin cargo and this could push India to look at blended oils or shifting from sunflower oil to other oils. It may so happen that India will have to live without sunflower oil at least for next 3 months," Vivek Pathak, managing director of Athena Tradewinds, an India-based trading house predominantly dealing in sunflower oil, said March 23.