India is expected to consume 2M tonnes less vegetable oil this season compared to 2018/19 as a result of the COVID-19 pandemic, OFI’s first webinar heard on 9 June.
Hindu Business Line consulting editor G Chandrashekhar said consumption by the world’s largest edible oil importer would total 21M tonnes in 2019/20, compared with 23M tonnes in 2018/19.
The country’s imports would reach 13.5M tonnes this season, a 10% fall compared to 15M tonnes in 2018/19.
“We would normally see a surge in consumption during the traditional festival season from August to October but this will remain muted due to losses in jobs and incomes.”
Economic activity was expected to slowly revive in the third quarter from July to September provided the pandemic had reached its peak in June, he added.
In terms of vegetable oil imports, palm oil was expected to take the biggest hit, forecast to fall to 7.5M tonnes this season against 9.2M tonnes in 2018/19. Soyabean oil import was expected to rise to 3.3M tonnes in 2019/20 (against 3.1M tonnes in 2018/19), while sunflower oil imports were forecast to increase to 2.6M tonnes this year against 2.3M tonnes in 2018/19.
Andrei Agapi, head of Asia Pacific Agriculture at S&P Global Platts, said China was back in the soyabean market and taking advantage of low international prices that reached US$350.44/tonne in May, compared with a peak of US$418.33/tonne in November 2019.
However, China’s actual purchases were largely symbolic against the extra US$32bn of agricultural products it had committed to buying in its Phase 1 trade deal with the USA.
This year, China’s purchases of US soyabeans had ranged around 8.5M tonnes/month. However, it would need to buy 14M tonnes/month from the USA to meet its trade deal commitments, which would be a difficult feat, Agapi said.
LMC International chairman James Fry said COVID-19’s impact on edible oil output had been limited.
“The biggest effect has been on the demand side, which has been hit by lockdowns.”
Consumption of palm oil for frying and cooking from the fast food sector, restaurants and the hospitality trade was not expected to return to normal levels for some time to come.
“Crucial for crude palm oil (CPO) prices will be what happens to Brent crude oil, which I expect to move to above US$45/tonne by fourth quarter 2020.”
This was because EU vegetable oil prices tracked Brent crude oil prices at a premium of around +US$525 at the top of the price band, and around Brent+US$425 for CPO.
UkrAgroConsult general director Sergey Feofilov said sunflower oil prices had reached record highs in 2019/20 but exports were also at a record level despite that.
Ukraine exported 6.1M tonnes of sunflower oil in 2018/19 and was forecast to export 6.5M tonnes in 2019/20. Russia’s exports would reach 3.3M tonnes this year against 2.6M tonnes in 2018/19, he said.
Godrej International director Dorab Mistry said global vegetable demand was not expected to come back to pre-COVID-19 levels until at least next year.
“June is a critical month as everyone replenishes their supply amid rejuvenated supply and diminished demand.”
However, after mid-July, stocks would have been built up.
The first OFI webinar attracted 204 attendees from 63 countries.
To view the webinar or download the presentations, go to: www.ofimagazine.com/webinars