MUMBAI: Indian refiners have cancelled about 70,000 metric tons of crude soyoil scheduled for delivery between December and January, as rising global prices and a weaker rupee made local soyoil cheaper than imports, four trade sources told Reuters.
Refiners in India, which is the world’s largest vegetable oil importer, scrapped the orders as global soyoil prices jumped to the highest level in four months and the rupee fell to a record low, making locally produced soyoil much cheaper than imported supplies.
“There is a huge disparity in soyoil import prices, and refiners now expect to lose more than $70 per ton on imported oil,” said a New Delhi-based dealer with a global trade house.
“As a result, many are cancelling the import contracts they signed in September.”
Refined soyoil is trading at about 124,700 rupees ($1,387.25) per ton in the domestic market, compared with roughly 132,100 rupees per ton for imported supplies.
The rupee fell to a record low of 90.42 on Thursday.
Palm rises on stronger Chicago soyoil, crude oil
Indian buyers booked crude soyoil cargoes in September at around $1,100 to $1,120 per ton, including cost, insurance and freight, after major supplier Argentina scrapped export taxes on soybeans and other food products.
This week, soyoil prices jumped to about $1,230 per ton, tracking a rally in Chicago soyoil futures.
The surge prompted Indian refiners to cancel contracts priced between $1,150 and $1,170 per ton, locking in profits of more than $30 per ton, said the sources who spoke on condition of anonymity because they were not authorised to speak to media.
The refiners reached a settlement with the sellers by accepting prices slightly below the current market rate, said an Indian buyer who operates a refinery on the east coast and cancelled shipments for January delivery.
Industry body Solvent Extractors’ Association of India did not immediately respond to requests for comment on the cancellations.
Crude soyoil is now being offered at roughly $1,220 per ton in India for January delivery, compared with about $1,140 a month ago.
Palm oil is currently trading at a discount of more than $100 per ton to soyoil, prompting refiners also to cancel soyoil contracts and switch to the cheaper alternative, said a Mumbai-based trader.
India buys palm oil mainly from Indonesia and Malaysia, and imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.
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