New Delhi: India's Palm oil imports in March increased by 28% from the previous month's eight-month low in February. Refiners were enticed by discounts on Palm oil, which lead to a reduction in purchases of Soy oil and Sun oil. As the world's largest importer of vegetable oils, India's surge in Palm oil imports could potentially aid Malaysia in decreasing its stocks and uphold Palm oil prices.

According to estimates India's import of Palm oil increased to 750,000 tonnes in the previous month, a surge from the 586,007 tonnes imported in February. In March, Palm oil imports rose due to its lower price of over $150 compared to Soy oil and Sun oil, which persisted from the previous month until the first half of March. This led refiners to boost their purchases of Palm oil.

There has been a significant drop in imports of Soy oil and Sunflower oil in March. Soy oil imports suffered the most with a 27% decline, reaching only 259,000 tonnes. The drop occurred due to the soaring premium of Soy oil over Palm oil and Sun oil, caused by an ongoing drought in Argentina. Meanwhile, Sunflower oil imports fell by a lesser degree, with a 4% decrease, reaching the lowest level in five months, at 150,000 tonnes.

Argentina may experience a significant drop in Soybean production in the upcoming 2022-2023 crop cycle. The world's largest exporter of Soy oil initially estimated a production output of 48 million tonnes, but due to the drought conditions affecting yields, this estimate has been cut in half to just 25 million tonnes.

The major suppliers of Palm oil for India are Indonesia, Malaysia, and Thailand, whereas India's imports of Soybean and Sunflower oil are primarily from Argentina, Brazil, Russia, and Ukraine. However, due to a considerable drop in Palm oil's discount compared to competitors, which plummeted from as high as $500 per tonne in the December quarter to below $70 per tonne, India's imports for Palm oil may decrease during April and May. Refiners are gradually transitioning to Sun oil, and it is expected that there will be a significant volume of Sun oil landing in the Indian market during April and May.