India – the world’s largest vegetable oil buyer – has cancelled more soyabean oil shipments from South America after the rupee’s slump to a record low widened the price gap between local and imported oil, Bloomberg reported.
Approximately 35,000-40,000 tonnes of the commodity from Brazil and Argentina – booked for delivery in February and the April-July period – had been scrapped, with total cancellations likely to exceed 50,000 tonnes, Aashish Acharya, vice president at Patanjali Foods, one of India’s top vegetable oil buyers, was quoted as saying.
Several other traders contacted by Bloomberg had also confirmed the development.
In December, Indian buyers had cancelled more than 100,000 tonnes of soyabean oil shipments from Argentina, equivalent to 20% of the volume the country imported in a typical month, Bloomberg wrote on 23 January.
India relies on imports for almost 60% of its edible oil consumption, according to the report.
A weaker rupee and higher global prices had pushed up South American soyabean oil to trade at US$25-US$30/tonne higher than local supplies, Acharya said in an interview.
That price differential had made imports uneconomical, prompting buyers to cash out, and instead look at tropical oil which had been trading at a discount, he added.
According to Bloomberg data, soyabean oil’s premium over palm oil has doubled from the start of the year to around US$146/tonne.
With China ramping up soyabean purchases, supplies of South American soyabean oil had tightened, the report said.
According to Commodity3 data, prices for Argentinian soyabean oil were at their highest level in more than a year at the time of the report.
Although soyabean oil prices in Chicago had also climbed, Indian prices had not followed as the rupee had weakened to a record low against the dollar, Mayur Toshniwal, president and head of trading at Indian vegetable oil processor and biodiesel producer Emami Agrotech was quoted as saying.
That mismatch could lead to more cancellations of soyabean oil deals and boost palm oil imports, he said.
