India traders ‘washout’ soybean oil shipments to lock in price rally gains

Total volumes of soybean oil washouts could reach 100,000-120,000 mt, reflecting active position adjustments by importers, Abhimanyu Solanki, director at KDC Agro & Textile Industries, said in a note Feb. 27.

A washout is an agreement which allows a buyer to sell back a product to the seller based on a pricing formula that factors in current market prices.

Soybean oil washouts are happening as buyers are getting good profits at current prices and do not wish to hold it for the forward shipments, Anilkumar Bagani, head of research at vegetable oil brokerage Sunvin Group, told Platts Feb. 27.

There is also a mismatch in global and domestic (soybean oil) prices, a vegetable oil analyst based in New Delhi told Platts Feb. 27.

Currently, the “landed” cost of new South American soybean oil at Indian ports is between $1,050/mt to $1,070/mt. However, the domestic spot market is trading closer to $1,020/mt. An importer taking physical delivery today would face an immediate loss of $30-$40/mt the moment the ship touches the dock, the analyst said.

This is why importers are opting to wash out these contracts, paying or receiving the price difference in cash rather than taking the physical loss.

India’s soybean oil imports hit a record 5.47 million mt in the 2024-25 marketing year (November-October), driven by a surge in soft oil demand over palm oil, according to trade body Solvent Extractors’ Association of India, or SEA.

India imports soybean oil mainly from Argentina and Brazil, while the country imports palm oil from Malaysia and Indonesia.

In the current MY 2025-26, Indian buyers are expected to import about 8 million-8.5 million mt of palm oil, 5 million-5.5 million mt of soyabean oil, 2.8 million-3.0 million mt of sunflower oil, and around 200,000 mt of other oils, including zero-duty imports routed through Nepal, Indian Vegetable Oil Producers’ Association President, Sudhakar Desai, said earlier in the month at a trade conference in Kuala Lumpur, Malaysia.

Stagnating demand in domestic markets is also driving traders to minimize their exposure to expensive imports, market participants said.

“Local supplies are cheaper, especially mustard oil supplies are plenty in the markets so why take the risk? Demand is still low, and offtake is also slow. Some buyers are also getting supplies from China and washing out Argentinian supplies, vegetable oils analyst Tushar Agarwal told Platts.

In first quarter of MY 2025-26 (November-January), India’s total vegetable oil imports reached 3.96 million mt, down by 2% from the same period last year. While palm oil imports rose, crude soybean oil imports fell 9% to 1.2 million mt, SEA data released Feb. 13 showed.

Platts assessed crude palm oil CFR WC India at $1,132.50/mt Feb. 26, down 0.7% from the day before.

On the origins side, crude palm oil FOB Indonesia was assessed at $1,110/mt Feb. 26, down 0.9% on the day. Soybean oil Argentina FOB Up River was priced at $1,114.66/mt, up 0.4%.