Edible oil prices, particularly palm oil, climbed earlier this month as crude surged amid the Middle East conflict. However, Indian refiners are not rushing to buy. In fact, Indian vegetable oil refiners are pulling back on fresh imports of palm oil, soyoil and sunflower oil, betting that the recent price spike may not sustain, Reuters reported, citing industry officials.
Instead of rushing to secure supplies at higher prices, buyers are choosing to wait, hoping to restock once prices ease if tensions cool.
No rush to buy at elevated prices
Since palm oil is also used in biodiesel, higher crude tends to push its prices up. But Indian importers don’t seem convinced the rally will last, as per Reuters.
“There’s no need to panic-buy. There are ample stocks available in the global market, and prices will come down sharply the moment the war ends,” Reuters quoted key industry stakeholders.
Imports seen dropping
As a result, imports are already slowing. India’s monthly vegetable oil imports are expected to fall to about 1.1 million tonnes in March, down from an average of 1.36 million tonnes in the previous marketing year, according to trade estimates cited by Reuters.
Palm oil shipments, in particular, are seen declining to around 680,000 tonnes, compared with 847,689 tonnes in February, the report added.
Stocks comfortable, domestic supply helps
Part of the reason for the cautious stance is that refiners are not short on supply. Strong imports in recent months have left inventories at comfortable levels. At the same time, fresh arrivals from India’s rapeseed crop which is expected to be a record harvest, are helping bridge the gap, reducing the immediate need for imports, Reuters added.
A wait-and-watch market
“Indian buyers have largely stayed on the sidelines over the past few days. The recent correction in palm oil prices may attract some buying, but overall sentiment remains wait-and-watch,” Sandeep Bajoria, chief executive of Sunvin Group, told Reuters.
Lower buying from India, the world’s largest importer of vegetable oils, could also put a lid on global prices. But much will depend on how long the geopolitical tensions and the current price rally last.