In a strategic move to shield against potential price shocks, Indian importers have aggressively booked large volumes of South American soybean oil for delivery in the future. Industry executives reveal that buyers have committed to purchasing over 150,000 tons for each month from April to July 2026, signaling deep concerns about the global edible oil supply chain.
Palm Oil Shortage Fears Drive Forward Buying
The primary driver behind this massive pre-commitment is the anticipation of a significant tightening in palm oil supplies next year. Indonesia, the world's largest palm oil exporter, plans to increase its biodiesel blending mandate (B50) from 40% to 50% by the end of 2026. This policy shift is expected to consume a substantial portion of the country's exportable surplus, reducing global availability.
"This is a considerably huge coverage in the forward months as the market is sensing palm shortages next year due to lesser production and more usage when B50 in Indonesia is rolled out," said Mayur Toshniwal, president and head of trading at Emami Agrotech Ltd. The buying interest gained momentum after soybean oil began trading at an unusual discount of $20 to $30 per ton compared to palm oil, a reversal of its typical premium.
Contingency Plans for Accelerated Indonesian Policy
Traders are also hedging against the possibility that Indonesia might accelerate its biodiesel plans. Budiman Suwardi of Prime EcoHarvest Commodities warned that if the Indonesian government suddenly implements B50 in the second half of next year, it could sharply push palm prices higher due to a lack of supply for exports. Officials in Jakarta are reportedly evaluating a phased rollout, potentially starting in the public sector, to avoid abruptly tightening supplies.
Compounding the palm oil worries are concerns over sunflower oil. Analysts like Anilkumar Bagani of Sunvin Group point to weaker harvests in the Black Sea region and Europe, which are preparing buyers for tighter sunflower oil shipments. For the April-July 2026 period, sunflower oil from the region is currently priced at a steep $230 to $250 premium over South American soybean oil.
Short-Term Market Dynamics Show Mixed Trends
While the forward deals for 2026 were secured at favorable levels, the current market presents a different picture. Aashish Acharya, vice president at Patanjali Foods Ltd, noted that offers for soybean oil cargoes for December and January are up to $110 per ton higher than prices locked in earlier. In the immediate term, palm oil retains a price advantage, trading about $90 to $100 cheaper per ton than soybean oil, prompting some buyers to shift back to palm.
This price disparity has even led to the cancellation of several soybean oil cargoes, totaling 25,000 to 35,000 tons, following a $50 drop in domestic soybean oil prices in India. Interestingly, this shift has suppressed demand for soy oil even during the winter months, a season when it is normally preferred because palm oil tends to solidify in colder weather.
The collective actions of Indian importers underscore a broader strategy of de-risking their supply chains against geopolitical and policy-driven volatility in the global edible oil market, with all eyes firmly on Indonesia's next move.
