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India’s sunoil imports to falter as Red Sea attacks lift freight costs

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NEW DELHI : India’s sunflower oil imports are set to decline in coming months as a rally in prices, driven by a surge in freight rates, is prompting buyers to shift to rival vegetable oils available at a discount, traders told Reuters.

The world’s biggest sunflower oil buyer typically sources most of its imports from the Black Sea region via the Red Sea. However, recent Houthi attacks have compelled shipping companies to reroute trade between Europe and Asia around Africa, increasing time and costs.

The elevated freight rates have lifted the landed cost of sunflower oil above that of soyoil in India for the first time in nearly a year, said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage.

“Sunoil imports were robust in the last few months due to the price advantage it had over soyoil. However, it lost this advantage because of rising freight,” he said.

Crude sunflower oil imports are currently offered at about $943 a tonne, including cost, insurance and freight (CIF), in India for February delivery, while crude soyoil is offered at around $935 and crude palm oil at $933, dealers said.

Two months ago, sunflower oil was trading at a $120 per ton discount to soyoil, which encouraged Indian traders to increase sunoil imports.

In December, India’s sunoil imports more than doubled from a month earlier to 260,850 tons.

Soyoil imports in December rose by 1.8% to 152,650 tons but remained significantly below the average imports of 306,000 tons in the marketing year that ended in October 2023.

In January, sunflower oil imports could fall to 225,000 tons as soyoil imports are likely to jump above 230,000 tons, said Rajesh Patel, managing partner at edible oil trader and broker GGN Research.

“In the coming months sunflower oil imports would go down to around 200,000 tons if the current price trend continues,” Patel said.

India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.

Argentina is currently offering sunoil at more competitive prices than supplies from Black Sea region countries, said a Mumbai-based dealer with a global trade house. Red Sea shipping disruptions would prompt India to buy more soyoil from South America and less sunoil from the Black Sea region, he said

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