India has completely suspended purchases of sunflower oil

India has not purchased sunflower oil for the second week in a row. The reason is the too large spread between the prices of sunflower and other vegetable oils. European buyers and India have almost completely formed stocks for November-December, so active demand is not expected in the near future. This was stated by Serhiy Repetsky, partner at Sunstone Brokers.

According to the analyst, at the beginning of last week the difference between sunflower and soybean oils on a CIF India basis was about $180, and with palm oil – about $200. In the markets of Spain and the Netherlands, the spread exceeded $120.

In general, during the past week there was a significant decrease in prices for vegetable oils. Sunflower oil fell the most: from the beginning to the end of the week its value on a FOB Ukrainian ports basis fell by $60.

The fall began with the palm oil market, which fell by $20–30 a day due to increased inventories and reduced exports from Malaysia and Indonesia. This caused a decrease in soybean oil quotes on the Chicago Stock Exchange, and then sunflower oil, as demand for it remains weak.

Additional pressure on prices is being created by favorable weather in South America. Argentina forecasts a record 6.1 million tons of sunflower seeds, but even its active oil offers at $1,170 FOB are not finding sufficient demand.

“Accordingly, from the beginning to the end of the week, sunflower oil on a FOB Ukrainian ports basis lost $60. Obviously, with the prices for sunseed that were there, this gives the processor a negative processing margin. Therefore, either sunflower seeds must adjust its price, or we will continue to observe a lull in the demand market and an active switch of factories to processing rapeseed and soybeans. A recovery in prices is unlikely,” says Repetsky.

Tags: imports, sunflower oil, prices, India