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India's palm oil imports dropped sharply by 41% in December, reaching a nine-month low of 500,175 metric tons. The decline is attributed to a price rally that pushed palm oil to a 2-1/2-year high, prompting refiners to favor cheaper soyoil, which saw a 3.2% rise in imports. Sunflower oil imports also declined by 22.3%. This shift reduced India's total vegetable oil imports by 24.3%, with palm oil losing market share to soyoil due to tightening supplies and higher prices. Indian buyers are likely to maintain reduced palm oil imports into January.

Key Highlights

* Palm oil imports plunged 41% in December to 500,175 tons.

* Soyoil imports rose 3.2%, reaching a four-month high.

* Sunflower oil imports dropped 22.3%, lowering overall vegetable oil imports.

* Palm oil prices reached a 2-1/2-year high, losing competitiveness to soyoil.

* Indian buyers are expected to sustain reduced palm oil imports.

India's palm oil imports saw a sharp decline in December, falling 41% month-on-month to 500,175 metric tons, the lowest level in nine months. The decrease comes amid a significant price rally, with palm oil reaching a 2-1/2-year high. This price surge has made palm oil less competitive compared to rival oils like soyoil, which is available at a discount.

Soyoil imports, in contrast, increased by 3.2% to 420,651 tons, the highest in four months. Meanwhile, sunflower oil imports declined by 22.3% to 264,836 tons. The combined effect of lower palm and sunflower oil imports resulted in a 24.3% reduction in India's total vegetable oil imports in December, which fell to 1.23 million tons, the lowest in three months.

Palm oil traditionally trades at a discount to soyoil and sunflower oil. However, tightening supplies and declining Malaysian exports have pushed palm oil prices above rival oils. Currently, palm oil holds a premium of over $40 per ton compared to soyoil, discouraging Indian buyers.

India sources palm oil primarily from Indonesia, Malaysia, and Thailand, while soyoil is imported from Argentina and Brazil. This shift in preference reflects the need for cost efficiency as refiners adapt to changing price dynamics.

Finally

India's declining palm oil imports, driven by high prices, signal a continued shift towards cheaper soyoil. Market trends suggest this pattern may persist in January.

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