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India buys record soyoil from China as prices fall below South America
China, the world's largest soybean importer, saw its soybean imports hit a record high in May. This led to increased processing activity and growing inventories of soymeal and soyoil.
'Chinese soybean crushers are struggling with excessive soymeal and soyoil. To reduce inventories, they are shipping oil to India,' a New Delhi-based dealer working with a global trading company was quoted as saying.
By exporting to India, Chinese crushers aim to cut back their swelling stockpiles as local demand slows.
Competitive pricing drives shift
Chinese suppliers quoted crude soyoil at around $1,140 per tonne, including cost, insurance, and freight (CIF), for shipments in the final quarter of the year. This compares with $1,160 from South America, another dealer said.
Faster shipping, lower freight
Apart from lower prices, quicker delivery times are another reason for India's interest in Chinese soyoil. Shipments from South America typically take over six weeks, while Chinese shipments reach India in two to three weeks.
India relies on imports to meet nearly two-thirds of its vegetable oil demand. These imports are mainly handled by private firms and include palm oil from Indonesia and Malaysia, sunflower oil and soyoil from Russia and Ukraine, as well as Argentina and Brazil.
Traditionally, India has sourced most of its soyoil from Argentina and Brazil. However, the current price advantage has prompted Indian buyers to look to China.
"In India and elsewhere, soyoil is trading at a premium over palm oil, but in China, soyoil is trading at a discount due to the supply glut," said a dealer based in Kuala Lumpur.
Potential for more imports
Given the size of India's edible oil consumption, the country may purchase even more soyoil from China if prices remain attractive.
"India's annual cooking oil requirement is huge, and it could buy even more from China if offered at competitive prices," said Sandeep Bajoria, chief executive of the Sunvin Group, a vegetable oil brokerage based in Mumbai.
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