India buys Russian sunflower oil at record high price as Ukraine supplies halt
India has contracted 45,000 tonnes of Russian sunflower oil at a record high price for shipments in April as edible oil prices in the local market surged after supplies from rival Ukraine stopped, five industry officials told Reuters.
Sunflower oil from Russia could help the world's biggest edible oil importer in easing the shortfall at a time when availability of vegetable oils is stretched because of Indonesia's decision to restrict palm oil supplies and lower soybean crop in South America.
"As vessel 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 contracted 12,000 tonnes of Russian sunflower oil for April shipments.
Refiners bought crude sunflower oil at a record price of $2,150 a tonne, including cost, insurance and freight (CIF), in India for April shipments, compared with $1,630 before Russia invaded Ukraine, dealers said.
Sunflower oil was cheaper than rival palm oil and soyoil before the conflict, but as supplies from top exporter Ukraine stopped, buyers have to pay hefty premium, Chowdhry said.
The Black Sea accounts for 60% of world sunoil output and 76% of exports.
Indian buyers were not making purchases of Russian sunflower oil for nearly a month, but now they are placing orders as banks are opening letters of credit (LC) for the imports, said a New Delhi-based dealer with a global trading firm.
"Indian buyers are paying in dollars. Indian insurance companies are providing cover to vessels bringing sunoil from Russia," the dealer said.
Shipments of more than 300,000 tonnes of sunflower oil from Ukraine to India are stuck as loading at Ukrainian ports is suspended, said a Mumbai-based dealer.
India imports sunoil mainly from Russia and Ukraine. It imports palm oil from Indonesia and Malaysia, whereas the bulk of soyoil is sourced from Argentina and Brazil.
India has now been trying to increase imports of sunflower oil from Argentina, said Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consultancy firm.
"Even after the imports from Russia and Argentina, there would be shortfall of sunoil. Nobody can replace Ukraine's shipments," Bajoria said.
India consumes around 200,000 tonnes of sunflower oil but currently refiners can import around 80,000 tonnes only, the New Delhi-based dealer said.
Consumers are forced to switch to soyoil, rapeseed oil and groundnut oil as sunflower oil supplies are limited, the dealer said.
"Sunflower oil is very expensive. This is forcing price sensitive buyers to shift to other oils," Bajoria said.