Key Takeaways
- India's aggressive vegetable-oil imports are causing congestion at major ports.
- At least nine vessels carrying 300,000 metric tons of edible oils are waiting to discharge at Kandla port.
- Refiners are expected to scale back purchases for October shipments, potentially boosting inventories in Indonesia, Malaysia, and Argentina.
India's vegetable-oil imports have led to congestion at major ports, delaying vessel unloading by as much as 10 days, according to industry officials. The issue is particularly acute at Kandla port, in the western state of Gujarat, which handles nearly a third of the country's total edible oil imports.
Sandeep Bajoria, chief executive of vegetable oil brokerage Sunvin Group, stated, 'Shore tanks are full, and the lack of storage space is delaying the unloading of vessels carrying edible oils.'
Kandla port is currently facing significant congestion, with at least nine vessels carrying 300,000 metric tons of edible oils waiting to discharge. Haldia, the second-biggest gateway for edible oil imports on the east coast, is also experiencing congestion, although to a lesser extent than Kandla.
India's edible oil imports in August reached an 11-month high of 1.54 million tons, and a similar quantity is expected to be imported in September. This increase in imports is causing a glut at ports, as edible oils for prompt delivery were cheaper than contracts for later months.
Rajesh Patel, managing partner at trader GGN Research in Rajkot city, explained, 'Refiners imported heavily in anticipation of strong festival demand, but consumption has not increased as expected, slowing the movement of cargo from port-based refineries.'
The South Asian country sources most of its palm oil from Indonesia and Malaysia, while soyoil and sunflower oil are imported mainly from Argentina, Brazil, Russia, and Ukraine. As a result, the build-up in inventories is now prompting refiners to reduce purchases for October to December shipments.
Industry officials predict that this congestion will prompt Indian refiners to scale back purchases of soyoil and palm oil for October shipments, potentially boosting inventories in top producers Indonesia, Malaysia, and Argentina. This could weigh on benchmark palm oil futures and soyoil futures.
The congestion at major ports is expected to continue, as India celebrates a series of festivals between August and November, when demand for edible oils typically peaks. However, the current situation is causing refiners to reconsider their import strategies.
Shore tanks are full, and the lack of storage space is delaying the unloading of vessels carrying edible oils.
Sandeep Bajoria, Chief executive of vegetable oil brokerage Sunvin Group
Refiners imported heavily in anticipation of strong festival demand, but consumption has not increased as expected, slowing the movement of cargo from port-based refineries.
Rajesh Patel, Managing partner at trader GGN Research in Rajkot city
