Global Soy Oil Oversupply and Its Implications on the Indian Edible Oils Market

Over the past few months, soy oil CNF has been trading cheaper at ~USD 70-100/T against CPO whereas in an ideal case, soya oil should be at a premium of ~INR 60-70/T.

Bumper soybean production in Argentina and higher crushing discounted the CNF against palm oil. Fall in the palm oil production in Indonesia and Malaysia and the potential of policy modification (B35 to B40 from Jan’25 onwards) are also key reasons for premium palm CNF. It led to record soy oil imports of 1.35 MMT during OND’24, whereas in normal cases it used to be around 0.8 MMT only.

During November 2024, India's total edible oil stocks at ports reported a higher 52% MoM to ~1 MMT. Although OND is peak for the domestic kharif oilseeds supplies.

Total edible oil stocks at ports by the end of Oct’24 were reported at 0.66 MMT lower, 39%. Higher edible oil demand encouraged the importers to fulfill the inventories, which resulted in record imports and a fall in the SBO prices by ~INR 15/Kg in the last 1.5 months. Meanwhile, RBD prices have fallen only INR 7/kg due to lower imports and tighter stocks. At the same time, mustard oil prices dropped ~10/kg.

Soy oil domestic demand during OND’24 pegged 1.56 MMT higher, 40% YoY, and 6% higher compared to the 5-year average on the back of cheaper prices than palm oils and sunflower oil. However, palm oil domestic demand is expected to decline towards 2.35 MMT, lower 17% year-on-year and 4% compared to the 5-year average.

Moving ahead, the domestic price spread between soy oil and palm oil may get narrow in anticipation of a decline in the soy oil imports, which may support the domestic soy oil prices, whereas palm oil prices restrict major gains due to a continuous premium over SBO. The anticipated reduction in soy oil imports is due to a lean supply period in South American countries.

Domestic palm oil prices are expected to stay at a premium over soft oils due to lower imports from the origins (Indo + Mal), anticipation of policy interventions during JFM’25, and the lean supply season.

During JFM’25, soy oil imports are anticipated to decline 26% QoQ to 1.0 MMT. At the same time, palm oil imports are expected to decline by 21% QoQ and 2% YoY to 1.71 MMT.

How low could global soy oil prices go?

Could they exceed market expectations and redefine the edible oil dynamics in India?

What does this mean for your procurement budget?

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Explore price drivers and long-term forecasts in our comprehensive report at www.transgraph.com/soy.oil