Mumbai: Industry officials told Reuters that India’s sunflower oil imports are likely to fall in the coming months as rising prices following Russia’s withdrawal from the Black Sea grain deal have made it uncompetitive against rival oils.
A drop in sunflower oil imports will force the world’s biggest buyer of vegetable oils to increase purchases of palm oil and soy oil to compensate.
A year-long deal allowing Ukraine’s grain to be safely exported across the Black Sea expired on Monday after Russia pulled out and warned it could not guarantee the safety of the ships, in a move the United Nations said would “deal a blow to those in need everywhere”.
Pradeep Chowdhary, managing director of Gemini Edibles and Fats India Pvt Ltd, said that sunflower oil shipments in India could decline by about 30% from the current level. Ltd., a leading Indian importer.
The Black Sea region accounts for 60% of world sunflower oil production and 76% of exports.
Spot prices have risen from $850 to $965 per metric tonne in the past five weeks on hopes of an end to the grain deal and a rally in rival oils.
India usually imports around 250,000 metric tonnes of sunflower oil per month, mainly from Russia, Ukraine, Argentina and Turkey.
Earlier this year, Black Sea exporters were aggressively selling sunflower oil at competitive prices, which helped reduce inventories, said Rajesh Patel, managing partner at edible oil trader and broker GGN Research.
Patel said India could import about 275,000 tonnes of sunflower oil in July, but imports could come down to about 200,000 tonnes from August.
Ukraine traditionally accounts for more than half of India’s sunflower oil imports, but Russia has been its biggest supplier in the marketing year ending October 31, data from the Solvent Extractors’ Association of India show.
The loading of large vessels at Ukrainian ports is not possible without the grain deal, said Sandeep Bajoria, CEO of vegetable oil brokerage and consultancy Sunwin Group.
“The termination of the deal will force Ukrainians to send Sunoil from Romania, Bulgaria and other European countries, but the re-routing will reduce volumes,” Bajoria said.
Ukraine has been selling sunflower seeds in recent months to Romania and Bulgaria, where they are processed into oil that is exported to India, said a New Delhi-based dealer of a global trading house.
“Uncertainty in Sunoil market will force some refiners to switch to palm oil and soya oil, which are also available at competitive prices,” the dealer said.
India imports palm oil mainly from Indonesia, Malaysia and Thailand, while soy oil is mainly imported from Argentina, Brazil and the United States.
(Reporting by Rajendra Jadhav; Editing by Tony Munro and David Evans)
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