Spread between palm oil and soybean oil low - India's trade is already reacting

Indian refiners have cut palm oil purchases and increased soybean and sunflower oil imports after a steep rally in tropical oil cut their rebates on competitors, industry officials told Reuters.
Lower purchases by the world's largest edible oil importer could weigh on palm prices, which have been revised 10% from a record high last month, but could support US soybean oil futures.
"Refineries generally prefer palm oil, as it is traded at a considerable discount compared to soy and sunflower oil. Since there are currently hardly any price differences, they are switching to soy and sunflower oil," said Govindbhai Patel, managing director of the trading company GG Patel & Nikhil Research Company.
Palm oil traditionally accounts for two thirds of India's annual edible oil imports of 13 to 15 million tons.
But Indian refiners are now cutting their palm oil purchases after importing a record 1.26 million tons in September as the palm oil and soybean oil spread widened from more than $ 120 a year ago to $ 20 a ton has decreased, said traders.
Crude palm oil is on sale in India for around $ 1,395 per tonne including cost, insurance, and freight (CIF) for December shipments, compared to $ 1,415 for crude soybean oil and $ 1,445 for crude sunflower oil.
The narrowing gap has led buyers to soybean oil, which is often perceived as superior in taste and quality to palm oil.
India's palm oil imports fell from 693,000 tons in October to 585,000 tons in November, said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil broker.
Soybean oil imports rose from 217,000 tons a month ago to around 400,000 tons in November, while sunflower oil imports rose from 117,000 tons to 200,000 tons, Bajoria said.
India buys palm oil from Indonesia and Malaysia, with soybean oil mainly imported from Argentina and Brazil. It sources sunflower oil from Russia and Ukraine.
In December, palm oil imports would stay below 600,000 tons and soybean oil imports could rise to over 400,000 tons, Patel said.
The spread between palm oil and soft oil is narrow for deliveries in December and January, but will widen again from February, said a Mumbai-based trader for a global trading company.
“From February onwards, Palm could gain more market share again. But imports would remain lower during the winter season, ”said the trader.
In winter, household palm oil consumption in India falls as the tropical oil hardens at lower temperatures.