India marks sunoil shift with 27k mt Argentina soyoil buying spree

Close to 30,000 mt of soyoil traded in Argentina’s Up River hub on Tuesday after a fall in prices tempted Indian importers to switch away from Black Sea sunoil and pick up Argentine supply in one of the market’s busiest trading days for months. 

Some 20,000 mt of soyoil for April shipment changed hands at 0.30 ct/lb under the May CBOT futures contract, equating to $1,080.75/mt FOB Up River while a 7,000 mt spot cargo for March 15–April 15 loading also traded at 0.50 ct/lb over the contract, or $1,098.25/mt FOB.

The parcels traded before the US market had opened with the volumes said to be the largest single-day activity “in at least several months,” according to an Argentina-based trading source.

While the outright prices are still close to multi-year highs, they are some $30/mt lower than where the market stood at the end of last week, as both CBOT futures and physical basis premiums have eased.

“Buyers are covering as they saw an attractive opportunity of lower basis along with weaker futures,” Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group, told Agricensus.

“It is natural, but there’s still not much buying from India,” he cautioned.

Nonetheless, soyoil prices in Argentina – the world’s largest exporter of the soft oil – are over $400/mt cheaper than an equivalent Ukrainian sunoil parcel on a delivered basis into India – the world’s number one vegetable oil importer.

“The sunflower oil spread was already too big, so India finally went for soybean oil. [India] thinks sunoil will stay or go firmer and so they finally went for soyoil in case it goes up as well,” the Argentina-based source said.

“Sunoil is on fire,” an Argentine broker added.

Sunoil prices in Ukraine – the world’s largest sunflower oil producer and exporter – surged to a record high of $1,508/mt FOB on Monday on tightening sunseed supply after a disappointing harvest.

That moved Ukrainian sunoil on a CIF India basis to $1,565/mt for April shipment, up around $200/mt in the space of a month.

It means that sunoil’s premium over soyoil on a CIF India basis – which stood at $1,128/mt CIF – has more than doubled over the past two months to $437/mt.

“We have actively seen a switch from sunoil to soyoil especially in northern and western India, while demand has been quiet in the south,” an Indian vegetable oil broker said.

“The market is doing its job,” a Ukraine-based sunoil traded said.