Shipments of the two soft oils that are mostly consumed in the country during the winter season are delayed by a month as container shipping giants, including Maersk and Hapag-Lloyd, are taking a longer route around Africa due to attacks on commercial vessels by Houthi militants in Yemen in the Red sea.
Also, the Black Sea, through which sunflower oil comes from Ukraine and Russia, is frozen, causing delays and increasing costs, trade insiders said.
“The ports are not operating full-fledged in the Black Sea and, therefore, there is a delay in the arrival of sunflower oil,” said Pradeep Chowdhry, managing director of Gemini Edibles & Fats India.
Traders do not expect the prices to come down immediately as the shipping problems that they have been facing since last month are likely to continue.
“Prices have firmed up and going ahead, we do not see an immediate drop in prices. Rather, prices may go up further,” Chowdhry said. In fact, with Malaysia – one of the major exporters of palm oil to India – reporting a decline in palm oil inventories, overall edible oil prices may increase in the coming months if the current trend continues, industry insiders said. India annually imports 14.5-15 million tonnes of edible oils. Of this, 9 million tonnes are palm oil and the rest are sunflower and soyabean oil.
India depends on imported oil as its own production cannot meet the domestic demand of 21-22 million tonnes annually.
While palm oil is imported from Southeast Asian nations of Malaysia and Indonesia, India depends on countries like Russia, Ukraine and Argentina for sunflower oil, and on Brazil for supply of soyabean oil.
Importers said the import price of sunflower oil has shot up by $50 per tonne to $960 per tonne in the last two weeks, which will impact its domestic prices.
If imports are diverted through other routes, then the arrival time of sunflower oil from the Russia-Ukraine region will go up to 40 days instead of 28 days, said Sandeep Bajoria, CEO of Sunvin Group, an edible oil importer.
“Though there is a good supply of edible oils in the Indian markets, the delay and price rise in imported oil will have to be passed on to the consumers by the edible oil companies,” he said.
In the case of palm oil, data from Malaysian Palm Oil Board shows that inventories have declined 4.64% in a month to reach the lowest level since August at 2.29 million metric tonnes as of December end. There was a substantial drop of 13.31% in crude palm oil inventories as well last month, totalling 1.55 million metric tonnes.
“This has led to an upswing in palm oil futures over the last two days,” a Mumbai-based oil broker said. If this decline continues in January, too, then prices of palm oil may firm up as well.
