Edible oils caught between weak demand and biodiesel bets, says analyst Mistry
Edible oil is seen in tiny polythene packets in Dhaka, Bangladesh March 24, 2023. REUTERS/Mohammad Ponir Hossain
MUMBAI, March 17 : Global edible oil markets are behaving unpredictably as energy supply disruptions from the Middle East war lift hopes for biodiesel demand, though subdued buying from major importers has clouded the price outlook, industry veteran Dorab Mistry said.
"Wartime market behaviour is always very different and many developments come unexpectedly," Mistry, the director of Indian consumer goods company Godrej International, told Reuters.
Crude oil prices jumped to a near four-year high last week after Iran responded to joint U.S.-Israeli attacks by threatening to fire on vessels moving through the Strait of Hormuz. This rally has made the use of vegetable oils for biofuel production more attractive.
"Right now, edible demand is subdued as prices have jumped. Market has high hopes for biodiesel. It remains to be seen which factor will eventually prevail," Mistry said.
One of the most closely watched analysts of edible oils, Mistry's forecasts for supply and prices often move markets.
PALM OIL PRICES SURGE
Malaysian palm oil prices have jumped 14 per cent so far this month to trade above 4,600 ringgit per ton, making the tropical oil more expensive than rival soyoil, except in Asia, where lower freight costs keep it competitive for buyers.
Mistry last month forecast palm oil futures to trade in a range of 3,800–4,300 ringgit until July 2026, as demand remains weak amid ample supplies.
India, the world's largest vegetable oil buyer, is reluctant to make new purchases at higher price levels, with refiners waiting for prices to correct, dealers said.
Indian importers have been hit after cutting inventories and washing out a large volume of previously booked imports, Mistry said.
Several soyoil cargoes from South America and the Black Sea, booked for delivery in the coming months, were washed out after global soyoil prices surged, as buyers found it more profitable to return the shipments to suppliers rather than process and sell them in India, dealers said.
Limited import arrivals are expected to support Indian edible oil prices, though strong mustard oil supplies are helping temper the increase, Mistry said.
Rapeseed and mustard are the main winter-sown oilseeds in India and supplies are expected from the new season crop from the next month.
