India contracted 45,000 tonnes of Russian sunflower oil at a record price for shipments in April as cooking oil prices in the local market soared after shipments from rival Ukraine halted, five industry officials told Reuters.
Sunflower oil from Russia could help the world’s largest edible oil importer fill shortages at a time when vegetable oil availability is strained due to Indonesia’s decision to cut palm oil supplies and lower the soybean crop in South America.
“As ship loading is not possible in Ukraine, buyers are trying to secure supplies from Russia,” said Pradeep Chowdhry, Managing Director of Gemini Edibles & Fats India Pvt. Ltd., which has contracted 12,000 tons of Russian sunflower oil for deliveries in April.
Refiners bought crude sunflower oil at a record $2,150 a tonne, including costs, insurance and freight (CIF) in India for deliveries in April, compared with $1,630 before Russia invaded Ukraine, traders said.
Sunflower oil was cheaper than competing palm oil and soybean oil before the conflict, but with supplies from top exporter Ukraine having stopped, buyers are paying a hefty premium, Mr Chowdhry said.
The Black Sea accounts for 60% of world solar oil production and 76% of exports.
Indian buyers haven’t bought Russian sunflower oil for almost a month, but are now placing orders as banks open letters of credit (LC) for the imports, a New Delhi-based trader at a global trading firm said.
“Indian buyers pay in dollars. Indian insurance companies provide insurance coverage for ships bringing solar oil from Russia,” the trader said.
Shipments of more than 3,00,000 tons of sunflower oil from Ukraine to India are stuck as loading at Ukrainian ports is suspended, a Mumbai-based trader said.
India imports solar oil mainly from Russia and Ukraine. It imports palm oil from Indonesia and Malaysia, while most of its soybean oil is sourced from Argentina and Brazil.
India has now sought to increase imports of sunflower oil from Argentina, said Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consultancy.
“Even after the imports from Russia and Argentina, there would be a shortage of suntan oil. No one can replace Ukrainian supplies,” Bajoria said.
India consumes about 2,00,000 tonnes of sunflower oil but refiners can only import about 80,000 tonnes at present, the New Delhi-based trader said.
Consumers are being forced to switch to soybean oil, canola oil and peanut oil as supplies of sunflower oil are limited, the trader said.
“Sunflower oil is very expensive. This is forcing price-conscious buyers to switch to other oils,” Mr. Bajoria said.
