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About Commodity Insights
19 Jul 2022 | 16:46 UTC
Highlights
Sunflower oil buying witnesses slight rise in June
Russia, Argentina remain primary origin for Indian import
The Russian decision to increase quota for exports of sunflower oil is likely to boost availability and purchase of the commodity in India as price spread between vegetable oils is expected to narrow down, market sources said.
The Russian government on July 17 raised export quota for sunflower oil by 400,000 mt from the previous limit of 1.5 million mt mentioning sufficient domestic supplies. Russia has banned exports of sunflower seeds till Aug. 31 with an export quota on oil to avoid shortages and ease domestic prices.
As per the market sources, this is expected to increase sunflower oil purchase from India as availability of the vegetable oil will increase with a slight price drop too, thereby closing down its price spread with other edible oils such as soybean. This will further push purchase from India as they government has already allowed a tax holiday on purchase of 2 million mt sunflower oil earlier this year.
Russia and Argentina remain two major suppliers of sunflower oil for India. However, Russia remains preferable destination for Indian buyers after supply from Ukraine- erstwhile leading exporter of commodity has stopped from May after Russia-Ukraine war.
"The latest revision in Russia export quota will improve supply availability especially for India as government has already distributed quota for tax free import up to 2 million mt last month. Prices of sunflower oil are also expected to decline by 3-5% in coming days." said Manoj Shukla, senior analyst at Agriworld, an agricultural commodity fundamental research firm.
Despite an increase in CIF price spread between crude soybean oil to crude sunflower oil from $245/mt in May to $255/mt with sunflower oil on higher side, the sunflower oil purchase by India rose slightly to 119,458 mt in June, according to data from the trade body, the Solvent Extractors' Association of India.
"India has a substantial domestic consumption of soybean oil and sunflower oil, with increased availability and with diminishing price spread in favor of sunflower oil, the purchase of commodity is likely to surge with some cuts in soybean imports. Russia also provides steep discount to traders from India and China on vegetable oil purchase, thereby this decision will further boost Indian imports," said Tushar Agarwal, a Mumbai based edible oil trader
Another India-based edible oil trader said, "Landing price of soybean and sunflower oil stood at $1,415/mt and $1,545/mt on Monday with gap expected to narrow down in coming days. India will buy more sunflower oil from Russia against Argentina as the former offers better turnaround time and discounted deals along with an increased availability now ."
India is the largest buyer of vegetable oils and imports comprise more than half of its annual consumption of 23 million-24 million mt. While about 60% of India's edible oil purchase is palm oil, soybean oil and sunflower oil follow it up at 35%-40%.