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Informist, Wednesday, Dec. 17, 2025

 

--Patanjali Foods vice-president: Soft oils trading at a premium to palm oil

--CONTEXT: Patanjali Foods Vice-President Aashish Acharya speaks to Informist

--Patanjali Foods vice-president: Palm oil $110 per tn cheaper than soyoil

--Patanjali Foods vice-president: Sunflower oil $245 per tn above palm oil

--Patanjali Foods vice-president:China likely to export more soyoil to India

--Patanjali Foods vice-president: Edible oil seen trading with upward bias 

--Patanjali Foods vice-president:Biofuel diversion may cut edible oil supply

 

By Taniva Singha Roy

MUMBAI – Prices of edible oil are likely to rise due to higher cost of imports, with a weaker rupee seen having little bearing on imports. While India is heavily dependent on imports when it comes to edible oil, there will be a shift to importing cheaper oils, Aashish Acharya, vice president at Patanjali Foods, tells Informist in an email interview.

 

According to Acharya, import demand in India is driven far more by relative price spreads between palm, soy and sunflower oils than by the movement of the currency. In addition, as the domestic crop is not much bigger than last year, imports are needed to meet demand.

 

Demand for palm oil is seen increasing as soft oils have been trading at a premium to the former. Palm oil has been about $110 per tonne cheaper than soyoil since early September, he said. Palm oil's import parity has turned highly competitive as Indonesia cut its export duty, making palm oil even cheaper for Indian refiners.

 

On diversion of edible oil for biodiesel production, Acharya said this would lower the availability of edible oil for use in cooking. Countries such as Brazil, the US, and Indonesia are steadily diverting more edible oils towards bio-fuel manufacturing, and this is driving the global food-vs-fuel competition.

 

Diversion for biofuel is likely to create a demand-supply mismatch, as consumption will only increase, Acharya said. A recent global supply-demand forecast suggests edible oil supply growth in 2025-26 would be modest, while demand growth would be stronger, meaning net stock-to-use ratio is expected to tighten, he said.

 

Following are edited excerpts of the interview:

 

Q. In November, India's import of palm oil increased compared to other oils, after a few months of lower imports. Why?

A. Soft oils are trading at a significant premium right now. If we look at the price spread, palm oil has been about $110 per tonne cheaper than soyoil since early September, and the discount remains around the same level today. Sunflower oil shows an even stronger divergence, with its premium rising to about $245 per tonne today from roughly $150 per tonne in early September.

 

When soft oils become this expensive, consumers and refiners naturally shift towards the most economical option, which is palm oil. This widening price gap is directly encouraging higher palm oil imports, as buyers prefer the lowest-cost oil for blending, retail packs, and industrial use. With soft oil premiums still high and palm oil offering better refining margins, demand is likely to remain palm-focused in the coming weeks as well.

 

Through May–August, India had already seen strong inflows of palm oil due to attractive pricing. Imports dipped due to winter seasonality, as soft oils were preferred and their arrivals were heavy, but November marks a clear rebound as refiners switched back to palm because of the widening price advantage.

 

Palm oil's import parity has become highly competitive as Indonesia reduced its export duty from $53.77, making palm even cheaper for Indian refiners. The broader trend remains that palm oil will continue to enjoy a price advantage until Indonesia's B50 biodiesel mandate begins in the second half of 2026, after which global palm availability may tighten again.

 

Q. Soyoil prices were lower in the beginning of the year, but are up at the moment. Is it because of China buying soybean from the US?

A. Soyoil prices are higher at the moment due to multiple overlapping factors. The US has increased blending mandates and renewable diesel capacity continues to expand. This has supported higher demand for soybean oil as feedstock, keeping US bean crushing strong and indirectly lifting global soyoil sentiment.

 

Meanwhile, China recently indicated a commitment to buy 12 million tonnes of soybean from the US in late 2025 and at least 25 million tonnes annually through 2028. This has improved long-term demand expectations for US beans and supported prices on the Chicago Board of Trade. But the agreement is forward-looking, and doesn't have an immediate physical pull effect.

 

Hence, the biodiesel policy in the US and China's long-term purchase commitments have contributed to the firmness in soyoil.

However, global soyoil prices have not rallied sharply. India's cost and freight levels in January were $1,170 per tonne and currently, it is around $1,180. The range during the year has been $1,065–$1,245 per tonne, a price difference of $180 or a rise of roughly 17%.

 

Factors that are likely to limit the rally in soyoil prices include an increase in the South American soybean crop, weak global edible oil consumption growth, and competitive pricing of rival oils.

 

Q. Now that the rupee has depreciated, do you see imports of edible oil falling and by how much? Is it true that some import contracts signed earlier have been cancelled? How will it affect supply?

A. A weaker rupee may have limited impact on the import cost of edible oils. The reason is simple – import demand in India is driven far more by relative price spreads between palm, soy and sunflower oils than by currency movement. Moreover, the domestic crop is not much bigger compared to last year, so import is needed to balance the Indian supply-and-demand scenario.

 

Even after the recent depreciation, the landed cost difference between the oils has not changed enough to alter refiners' buying behaviour. Pipeline stocks are comfortable, palm oil continues to trade at a significant discount to soft oils, and refiners had already booked a good volume of cargoes in advance.

 

Because of these factors, the industry is not cutting import volumes and about 70,000 tonnes of soyoil forward contracts were cancelled due to $50 below replacement margin. At most, a few shipments get rescheduled, but overall availability and flow remain normal.

 

So, the rupee's move looks more like a currency fluctuation, not a demand-changing event. India's edible-oil supply remains stable, and imports should continue broadly in line with recent months.

 

Q. Domestic edible oil prices have been subdued for a long time now. Will prices in domestic spot markets increase due to costlier imports? Also, will this lead to a rise in retail prices?

A. Yes, imported edible oil plays a significant role in India's supply and demand dynamics. Since India relies on imports for a substantial portion of its edible oil consumption, any upward or downward movement in global edible oil prices is likely to have a direct impact on domestic spot and retail prices. When global prices rise, the cost of imported oil increases, which eventually translates into higher domestic prices. Conversely, if global prices fall, domestic prices may soften. The degree and speed of these changes in the Indian market depend on factors such as existing domestic inventories, supply chain adjustments, and short-term demand fluctuations. Overall, global market trends remain a key driver of domestic edible oil pricing in India. A drop in retail prices is subject to indicative prices, as over 65% volume is being imported.

 

Q. Local soybean prices are currently below the minimum support price. Do you see prices increasing if imports fall?

A. Yes, soybean prices are currently below the minimum support price, and the crushing season is still ongoing. While domestic supply may tighten in the coming months, potentially putting upward pressure on indigenous soybean rates, imports are expected to continue as usual. Fluctuations in import prices may lead to short-term volatility in domestic prices, but a significant reduction in imports is unlikely. Sunflower oil, which has a higher spread over palm and soybean oil, may shift demand towards soybean oil, further supporting its domestic consumption. Moreover, soybean oil plays a major role in India's edible oil supply and demand dynamics, and comparing with previous oil years, imports of soybean oil were around 60% higher last year than the year before, making a decline in imports improbable. Therefore, while domestic prices may rise due to tightening supply and demand shifts, imports are expected to remain steady.

 

Q. Sunflower oil prices are $200 higher than palm oil prices. Will this lead to consumption shifting from sunflower to other cheaper oils?

A. Yes, the current premium of sunflower oil over other edible oils increases the likelihood of consumption shifting towards cheaper alternatives. Sunflower oil is trading at a sizeable spread roughly $245 per tonne above palm oil and around $110 per tonne above soybean oil, placing it at a clear premium in the soft oil complex. At these differentials, buyers, especially in price-sensitive markets like India, tend to substitute sunflower oil with lower-priced options such as palm oil or soybean oil.

 

Looking ahead, supply fundamentals also support the continuation of this premium. Ukraine and Russia, the two largest sunflower oil exporters, are reportedly facing a combined crop shortfall of nearly 2.5 million tonnes, which is likely to keep sunflower oil supplies tight and maintain elevated prices. As a result, the premium over palm and soybean oil is not expected to ease in the near term, making further consumption shifting quite possible.

 

However, there is one scenario in which the sunflower oil premium may narrow. If global biodiesel mandates increase, palm oil (in Indonesia) and soybean oil (in the US and Brazil) could see stronger demand from the energy sector. Higher biodiesel blending requirements would lift palm and soyoil prices, reducing the price gap with sunflower oil. In such a case, the premium may compress, and some demand could shift back towards sunflower oil.

 

In summary, at current spreads, substitution away from sunflower oil is likely, but any major shift in biodiesel policy could rebalance price spreads and alter consumption patterns again.

 

Q. China is currently seeing a soyoil glut. Do you see China exporting more soyoil to India?

A. Yes, China is likely to export more soyoil to India. China is currently carrying a surplus of soyoil because its crushing volumes have increased significantly after the new purchase commitment with the US, under which China agreed to buy 12 million tonnes of US soybean in the last two months of 2025 and at least 25 million tonnes annually through 2028. Higher crush automatically leaves China with excess soyoil, which it must divert to export markets. For India, Chinese soyoil is attractive because of its competitive pricing and shorter logistics time, making it preferable for several buyers. This trend is already visible – India imported around 112,500 tonnes of Chinese soyoil between September and November, and continued arrivals of 40,000–50,000 tonnes per month look likely as long as China's surplus persists. 

 

Q. Do you see a bull run in the edible oil market?

A. Demand remains structurally strong in India. With per-capita edible oil consumption well below world average recommended levels, and overall consumption at 26 millions of tonnes annually, India's reliance on imported edible oils keeps demand robust. There is supply tightness globally. According to a recent global supply-demand forecast, edible oil supply growth in 2025-26 is modest, while demand growth is stronger, meaning the net stock-to-use ratio is expected to tighten

 

External risks such as weather, supply disruptions, global economic slowdown or changes in trade policies could quickly alter global edible oil supply, which means volatility may rise, but not necessarily a clean upward trend.

 

Q. With festivals like Ramadan and the Chinese New Year early this time, do you see upward pressure on prices of edible oils?

A. Yes, we do expect some upward pressure on edible oil prices with Ramadan and the Chinese New Year arriving earlier this year. These festivals typically lead to a short-term lift in consumption and create additional firmness in the market.

 

While festival timing increases pressure on demand, the actual pressure on prices is influenced by many broader factors such as global supply, origin policies, freight, currency movement, and pricing of rival oils.

 

Because these supporting factors are currently mixed, but slightly constructive, the combination of early festival demand and supportive fundamentals could keep edible oil prices biased to the upside during this period.

 

Q. Mustard oil prices have gone up. Do you see this leading to a rise in output of mustard oil?

A. Yes, higher mustard oil prices are likely to increase mustard oil output. When prices move up, production goes up, crushing margins improve, giving processors a stronger incentive to crush more seed. As a result, mills tend to increase their operating rates, which lifts overall oil production.

 

However, the increase in output will depend on how much seed is available in the market and how quickly mills can scale up crushing activity. But overall, a firm price environment generally supports higher production levels.

 

Q. Several countries such as Brazil, the US and Indonesia are planning to divert edible oils for bio-fuel production. Will this have an impact on the availability of edible oil as a cooking oil?

A. The biodiesel policies globally will clearly impact edible oil availability for cooking use. A number of major producers – Brazil, the US, and Indonesia – are steadily diverting more edible oils towards bio-fuel manufacturing, and this is strengthening the global food-vs-fuel competition. 

 

In Indonesia, even though the country is expanding its palm oil harvesting and processing capacity, the growth is not sufficient to match the aggressive rise in biodiesel mandates. The government is already moving from B35 to B40 and has signalled readiness to push towards B50 blending, which will pull an even larger share of crude palm oil into the energy sector. This means that a notable portion of Indonesia's incremental production despite capacity additions will still be absorbed by fuel blending. As a result, the amount of palm oil available for the food and export market will inevitably tighten.

 

In the US, the Environmental Protection Agency has strengthened Renewable Fuel Standard (RFS) volumes and higher biomass-based diesel mandates are structurally increasing demand for soybean oil as a key bio-fuel feedstock. This reduces the flexibility of soybean oil supply for global edible oil trade and increases competition among importing countries.

 

Brazil is also expanding biodiesel usage, continuing to push blending requirements higher, which will increasingly divert soybean oil away from traditional cooking oil channels.

 

Given these combined shifts, global edible oil supplies will face structural tightness, and the volume available for food use will remain under pressure. Even with capacity additions in Indonesia, the rising biodiesel mandates (B40–B50) and stronger biodiesel policies in the US, the Environmental Protection Agency will ensure that fuel demand continues to absorb more edible oils than before.

 

Diversion to biofuel will tighten availability for cooking oil and keep the global balance sheet comparatively tightened.  End

 

US$1 = INR 90.37

 

Edited by Avishek Dutta

 

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