India's vegetable oil imports strain port storage, delaying unloading

MUMBAI: India's aggressive vegetable-oil buying has led to congestion at ​major ports, delaying vessel unloading ​by as much as 10 days as shore tanks fill ​and refiners struggle to clear incoming cargo, industry officials told Reuters.

The congestion is expected to prompt Indian refiners to scale back purchases of soyoil and palm oil for October shipments, potentially ‌boosting inventories in ⁠top ⁠producers Indonesia, Malaysia and Argentina and weighing on benchmark palm oil futures and soyoil futures.

"Shore tanks ​are full, and the lack of storage space is delaying the unloading of vessels carrying ​edible oils," said Sandeep Bajoria, chief executive of vegetable oil brokerage Sunvin Group.


"At least nine vessels carrying 300,000 metric tons of edible oils are waiting to discharge ​at Kandla port."

Kandla, in the western state of ⁠Gujarat, is ‌India's largest gateway for edible oil imports, handling nearly a third of the country's total arrivals.

Haldia, the second-biggest gateway for edible oil ⁠imports on the east coast, is also facing congestion, although to a lesser extent than Kandla, dealers said.

The South ​Asian country's edible oil imports in August jumped to an 11-month high of 1.54 million tons and a similar quantity is likely to be imported in September as well, they said.

As edible oils for prompt delivery were cheaper than contracts for later months, Indian refiners increased their purchases for August and September ‌delivery, causing a glut at ports, said Rajesh Patel, managing partner at trader GGN Research in Rajkot city in the western ​state of Gujarat.

Refiners ​imported heavily in ⁠anticipation of strong festival demand, but consumption has not increased as expected, slowing the movement of cargo from port-based refineries, Patel said.

India celebrates a series of festivals ​between August and November, when demand for edible oils typically peaks.

The build-up in inventories is now prompting refiners to reduce purchases for October to December shipment, Bajoria said.

India sources most of its palm oil from Indonesia and Malaysia, while soyoil and sunflower oil are imported mainly from Argentina, Brazil, Russia and Ukraine.