Sunflower Oil

Prices Of Soybean Oil Rise As India Abolishes Duty-Free Imports Of Sunflower Oil

Prices Of Soybean Oil Rise As India Abolishes Duty-Free Imports Of Sunflower Oil

According to the Solvent Extractors Association of India (SEA), India is the largest importer of vegetable oil in the world. The country imports around 60% of its annual consumption of 23-24 million tonnes every year.

As the demand for edible oil has returned to “pre-pandemic” levels, India is expected to import 14.5–15 million tonnes of vegetable oils in FY 2022–23, the highest level since FY 2019–20. 8.5–9 million tons of palm oil, 3.5 million tons of soy, and 2.5 million tons of sunflower oil may be imported.

Indonesia, Malaysia, and Thailand are top palm oil suppliers for India while Argentina, Brazil and the USA remain the major suppliers of soybean oil. For sunflower oil, India highly depends upon Russia and Ukraine for its domestic needs.

Government Of India’s (GOI) Decision

To help local oilseed producers, the Government of India (GOI) has decided to stop allowing the duty-free import of 2 MMT of unrefined soybean oil and introduce a 5.5% import tax starting on 1st April 2023.

In May 2022, a decision was made to allow the duty-free import of 2 million tons of Sunflower Oil due to a decline in supplies from the Russian Federation and Ukraine amid rising global prices. This quota was supposed to be in place through 2023/24 MY, but due to issues with Ukrainian exports, the increase in supplies did not materialize. Instead, sunflower oil prices unexpectedly dropped to the same level as palm oil prices.

Sunflower Oil Exports From Ukraine

Prices of Sunflower oil in the export market in January-February have been the lowest since November 2020 as the blockage of operations in the grain corridor limits the supply of products from Ukraine to the global markets (especially distant ones).

Ukraine decreased its exports of sunflower oil by 14% to 2.28 million tons between September and January 2022/23 compared to the same period the previous season, with significant decreases to India (54%), China (36%), and Iraq (32%). In parallel, exports to the EU rose by 19% to 1 million tons, and the proportion of EU nations importing sunflower oil from Ukraine rose 32% to 44%. Furthermore, 85% of the EU’s imports of sunflower oil come from Ukraine, which continues to be the top supplier.

Sunflower Oil Imports In India

India increased its imports of vegetable oils to 14.03 million tonnes in MY2021/22 after two years of low imports, but the war in Ukraine drove up prices and decreased demand, but large reserves came in handy. Currently, they total 3.5 million tons, up from 1.8 million tons the year before.

Indian consumers are unconcerned about Black Sea port export issues because they are receiving more oil from Russia, which has switched supplies away from Europe and toward China and India.

In the first quarter of MY2022/23, India imported 4.75 million tonnes of vegetable oils as opposed to 3.61 million tonnes during the same period last year.

Vegetable Oil Production In India

Compared to 8.77 million tons in FY 2021/22, production of vegetable oils will increase to 10 million tons in MY 2022/23 (the USDA forecasts 9.16 million tons).

According to the Solvent Extractors’ Association of India, prices will remain stable in the upcoming months provided some prominent events do not worsen the state of the global economy. Due to the low domestic oil prices, the government will likely need to assist farmers and impose an import tax on palmolein. Since restrictions on its import were removed in 2021 to help combat food inflation, palm oil from Malaysia and Indonesia is currently the most affordable on the Indian market.

Oil refineries, who are experiencing low capacity utilization, are requesting a 12.5% import duty increase to a 20% import duty on RBD palm olein.

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