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Informist, Wednesday, Nov. 19, 2025

 

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--Market expert Chandrashekhar: See veg oil price range bound for few months
--CONTEXT: Commodity market expert G. Chandrashekhar speaks to Informist
--Market expert Chandrashekhar: See 2025-26 world veg oil output 235 mln tn
--Market expert Chandrashekhar: See '25-26 world veg oil demand 229 mln tn
--Market expert Chandrashekhar: See '25-26 global CPO output up at 81 mln tn
--Market expert Chandrashekhar: See low edible oil demand on econ headwinds
--Market expert Chandrashekhar: See veg oil surplus of 6-7 mln tn in '25-26
--Market expert Chandrashekhar: China's US soybean buys may not impact supply

 

By Taniva Singha Roy and Abhijit Doshi

 

MUMBAI - With ample global supplies and no sign of acceleration in demand, the edible oil market appears to be range-bound over the next three to four months, G. Chandrashekhar, a commodity market expert and policy commentator, told Informist in an interview. While production of major oils is set to outpace consumption, the economic headwinds in major consuming nations, softer crude oil prices, and seasonal factors will continue to limit prospects of a bull run.

 

Against this backdrop, the key factors influencing the market include biodiesel policies in several countries such as US, Indonesia and Brazil, China's trade decisions and India's shifting import patterns, he said.

 

On the NITI Aayog's report wherein it said India would not be self-sufficient in edible oil for a long time, Chandrashekhar said the agency is expected to offer strategic policy guidance to advance India's goal of aatmanirbhar Bharat, but its report appeared defeatist. With the right policies, research support, and investments, India can realistically cut its import dependence from 60% to about 20% over the next 10–12 years, he said.

 

Global production of major edible oils in 2025-26 is seen at 235 million tonnes, up 5 million tonnes from the previous year. On other hand, consumption is projected at 229 million tonnes. Clearly, the production is likely to be higher than consumption.

 

In terms of shift in the market dynamics, Chandrashekhar said that several competing oils, such as palm oil, soyoil, rapeseed oil, and sunflower oil, are competing for market share in a price-conscious country or a market like India. Consumers in India don't have a preference and are ready to import and consume whichever oil is cheaper.

 

Extraneous factors such as economic growth, purchasing power and government supplies influence prices of these vegetable oils. They in turn cause a shift in market dynamics in the edible oil sector, he said.

 

He said that China buying soybean from US was not going to have a major impact on the market. This is because it will reduce the purchases from Brazil. Hence, there is not going to be any supply shortage when it comes to soybean as Brazil will diversify export destinations.

 

Below are the edited excerpts from the interview:

 

Q. Many participants in the edible oil sector are of the opinion that we are heading for a bull run. Do you share this belief?

A. The probability of a bull run in the edible oil market is rather low. There are multiple drivers in this market but at the moment, there is no reason for a bull run. Vegetable oil market over the next four months will remain quite subdued and prices will remain range-bound.

 

Global production of major edible oils in 2025-26 is seen at 235 million tonnes, up 5 million tonnes from the previous year. On the other hand, consumption is projected at 229 million tonnes. Clearly, the production is higher than consumption. The ending stocks for 2025-26 are either going to remain unchanged as compared to the previous year, or they could be slightly higher.

 

If we were to come to palm oil very specifically, crude palm oil production is also likely to increase in 2025-26 by at least 2 million tonnes at 81 million tonnes. It could even be slightly higher, but conservatively the incremental production will be above last year's. Last year palm oil output was 79 million tonnes.

 

Moreover, most nations are facing economic headwinds, which could impact growth and eventually lead to lower demand for edible oil. The US is facing high levels of inflation and growth in China is slowing down substantially. In addition, during the winter months--December, January, February and March--there is a seasonal factor which will come into play and there will be a compression or contraction in demand for palm oil. Palm oil solidifies during the winter season. 

 

Hence, the overall sentiment for edible oil prices is not bullish. The speculative funds, particularly the long only funds, will immediately exit the market. And when speculative funds exit the market, it has an exaggerated impact on prices. And then there is a relationship between vegetable oil prices and mineral oil prices. They move in tandem as edible oils are used as biodiesel mixes. Particularly so for crude palm oil. And currently crude prices are falling. Brent is less than $65 a barrel. It is likely to come closer to $60 a barrel. Brent will hover around $60 a barrel because of oversupply situation. The world is going to face an oversupply situation.

 

Q. Indonesia is talking of going from B40 to B50 blending. Do you think that is feasible? What are the headwinds?

 

A. Indonesia will certainly not be able to achieve B50--blending 50% diesel with ethanol--in the next two years. The government of Indonesia has already decided that it will not implement B50 before the second half of the next year.

 

In January, they moved from B35 to B40 and it has been about 10 months since they started, and they are already struggling to reach the target. Indonesia is not anywhere near B40. They are somewhere B35, B36 or B37.

 

But the point market participants have to note is that because palm oil prices are subdued, which goes against the expectation of the producers and exporters, Indonesia wants to talk the market up.

 

Q. Several other countries such as Brazil and the US are pushing for bio-diesel policies. Will it curtail availability of different edible oils for human consumption?

 

A. The global vegetable oil market will be in a 6 million to 7 million tonnes surplus after taking food consumption, fuel consumption and industrial usage into account. Hence, bio-diesel policies in different countries will not curtail edible oil for human consumption.

 

And therefore, even if there is a small increase in diversion of vegetable oil towards fuel or any other industrial use, it's not going to make a big difference. The market is not going to get into a deficit.

 

Q. China has recently agreed to purchase soybean from the US. What effect will it have on the market dynamics?

 

A. The effect is going to be nil in the global market. China buying soybean from the US will only have a positive impact on the US domestic market.

 

When China stopped buying from the US, farmers there started to suffer because their domestic prices started to fall. But China was buying from Brazil. Therefore, China's supply side was quite safe because they were buying from Brazil increasingly.

 

China has now agreed to buy from the US, so its purchase of soybean from Brazil will fall. So for the global market, it will have no impact at all. China would also diversify its sources of supply. They would not like to rely on a single source of supply. And therefore, China buying from the US is not going to make any significant fundamental supply-demand change in the global edible oil market.

 

Q. With festivals like Ramadan and the Chinese New Year happening early next year, do you see upward pressure on prices of edible oils in the next few months?

 

A. Prices are unlikely to see an upward trend in the start of next year despite festivals, as the festivals demand is already factored in. The importers have already covered fairly in advance. And therefore, it is not a new demand which is coming up now. That demand for Jan-Feb is already covered.

 

Q. The Solvent Extractors' Association data show that India's vegetable oil imports declined 9% on year. Considering that in general, India's oil consumption is going up, what could explain this fall?

 

A. India's edible oil imports were 13.98 million tonnes in October, according to the SEA data. But India has also imported over 600,000 tonnes of edible oil from Nepal, which is not included in the total figure. There is no contraction in import volume nor is there any contraction in import demand.

 

Moreover, palm oil prices, until three months ago, were far above soft oil prices. So India's import of soft oil was higher because we are a highly price-conscious market. Now that palm oil has got into a discount to soft oil, I think we will continue to buy more of the former oil.

 

But the import numbers are the same. Import numbers haven't actually changed. Moreover, as of Oct. 1, the port-based and pipeline stocks were 2 million tonnes. And as of Nov. 1, they reduced to 1.7 million tonnes. That is a 300,000 tonnes destocking which we have sold from the stocks. India's import is not slowing down.

 

Q. People often talk about shift in market dynamics. Can you expand on it?

 

A. There are several competing oils, palm oil, soyoil, rapeseed oil, sunflower oil. All these are competing for market share. And for a price-conscious country or a market like India, what is important is price.

 

India doesn't care whether we eat palm oil or soybean oil or sunflower oil or whatever. And therefore, whichever is the lowest priced oil, the country is ready to import, and we are ready to consume. But beyond this mix of vegetable oils in India's import basket, there are also extraneous factors. One is economic growth and the other is purchasing power.

 

Third is the government supplies. For example, if the government of India decides that it will supply palm oil through the public distribution system, that would change the composition of the import basket. And that would change the dynamics of the market.

 

If there is a major weather-related issue, La-nina or El Nino, it can influence supplies. But more often than not, demand will continue to rise gradually. Demand doesn't take any big spike. Supply side will be volatile because of weather conditions, government policies, export taxes, etc.

 

Q. What is your outlook for mustard oil?

 

A. The last five-year average for mustard acreage was about 8 million hectares. As on Nov. 5, the area under mustard cultivation is 5.3 million hectares, whereas last year, at the same time, it was 4.6 million hectares.

 

Therefore, we have done much better as far as rapeseed planting is concerned. We had extended rainfall into October in almost the entire country, which increased soil moisture.  And that is what has encouraged the growers to plant more of mustard.

 

The production target set by the government of India for rapeseed mustard is 13.9 million tonnes. Last year, the target was 13.8 million tonnes but only 12.6 million tonnes was achieved.

 

It is important for the country to popularise the consumption of mustard oil, which is a great oil source with about 40% oil content. If the demand and consumption of mustard oil is popularised, it will do good for the farmers. Mustard can potentially contribute to India's move towards self-sufficiency.

 

Q. NITI Aayog had some time ago prepared a report which said that India will not be self-sufficient in edible oil for a long time. How do you react to this finding? What would you suggest to make India aatmanirbhar in the edible oil sector?

 

A. NITI Aayog is an institution, which is, in my view, supposed to provide strategic policy inputs for the government to achieve whatever objective the government has set for itself, which is Aatmanirbhar. The report in my view is defeatist.

 

Given the right policy environment, right research inputs, right investments, India should be able to move rapidly and easily reduce our import dependence from 60% to about 20% in the next 10-12 years. But being 60?pendent on import is dangerous. That's an alarming situation.

 

The requirement for import of 10% to 15% is fine. But anything above that should ring an alarm bell within the government. But whatever strategic action plan needs to be implemented, it needs enormous political will on the part of the government to implement.

 

Q. The US Department of Agriculture last week released its revised estimates of global production, consumption, trade and stocks of various agricultural crops for 2025-26. How do you see the forecast for edible oil sector? Are they in keeping with the trend, or they represent any major change from the earlier estimates? How are markets reacting to them?

 

A. There is no marked change as far as oilseeds and vegetable oils are concerned. And September figures and November figures are by and large the same.

 

The US Department of Agriculture has lowered its global oilseed production estimate for 2025-26 (May-Apr) to 688.01 million tonnes from 691.55 million tonnes projected in September. Production has been lowered by 3.54 million tonnes mainly due to lower soybean and sunflower production, partly offset by higher rapeseed and cottonseed, the department said in its November edition of the World Agricultural Supply and Demand Estimates report.

 

The department did not release its October report in view of the shutdown of the US government administration.

 

Usually between August, September and October, there are major changes depending on weather conditions, etc. But this year, weather has been benign across the world. And therefore, there has not been any significant or major difference between the September and November reports. And the market obviously has accepted it.  End

 

Edited by Akul Nishant Akhoury

 

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