Vegetable oil glut at Indian ports could increase pressure on global prices

India’s aggressive vegetable oil purchases have caused congestion at major ports and a shortage of available storage capacity. With shore tanks full, vessel unloading is being delayed by as much as 10 days, which could prompt Indian refiners to reduce purchases in the coming months.

The most severe congestion is at Kandla, which handles nearly a third of India’s edible oil imports. At least nine vessels carrying around 300 thsd tons of edible oils are waiting to discharge. Congestion has also been reported at Haldia, the country’s second-largest gateway for edible oil imports.

India imported 1.54 mln tons of vegetable oils in August, the highest volume in 11 months, with a similar amount expected in September. Refiners stepped up purchases for August and September delivery due to lower prices for prompt shipments and expectations of stronger seasonal demand during the festival period.

However, domestic consumption has increased more slowly than market participants expected, leading to a build-up of inventories. As a result, Indian refiners are now planning to reduce vegetable oil purchases for October-December shipment.

Lower demand from India could lead to higher inventories in major exporting countries and increase pressure on global palm and soyoil prices. India sources most of its palm oil from Indonesia and Malaysia, while soyoil and sunflower oil are imported mainly from Argentina, Brazil, Ukraine and Russia.

Tags: vegetable oils, price, India, global market