PALMOILMAGAZINE, JAKARTA – India, the world’s largest buyer of vegetable oils, has started scaling back its soybean oil purchases from South America, a move that could significantly strengthen demand prospects for palm oil in the global market.
According to Bloomberg, cited by Palmoilmagazine.com on Saturday (January 24, 2026), Indian buyers have canceled soybean oil shipments from Brazil and Argentina totaling between 35,000 and 40,000 tons, originally scheduled for delivery in February and during the April–July period. Total cancellations are estimated to potentially exceed 50,000 tons.
The information was confirmed by Aashish Acharya, Vice President of Patanjali Foods Ltd., one of India’s largest vegetable oil buyers. Several other traders contacted by Bloomberg also verified the cancellations.
Fresh Cancellations After December Pullback
The latest move adds to a series of earlier cancellations. In December, Indian buyers reportedly withdrew from more than 100,000 tons of Argentine soybean oil contracts—equivalent to roughly 20% of India’s monthly vegetable oil imports.
India remains heavily dependent on overseas supply, with around 60% of its edible oil consumption met through imports.
Acharya said the sharp depreciation of the rupee, combined with rising global prices, has made South American soybean oil US$25–US$30 per ton more expensive than domestic supplies.
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“With that kind of price gap, imports are no longer economical,” he explained, adding that buyers are increasingly opting to cancel contracts and reassess procurement strategies. Attention is now shifting toward tropical oils, which are seen as more attractive due to their discounted pricing.
Bloomberg data show that the premium of soybean oil over palm oil has widened sharply. Since the beginning of the year, the spread has reportedly doubled, with soybean oil now trading at around a US$145-per-ton premium over palm oil.
China Tightens Supply of Soybean Oil
Supply-side pressures are also contributing to market shifts. Soybean oil availability in South America is tightening as China steps up soybean purchases, reducing the volume available for crushing into oil.
Bloomberg also noted that near-term Argentine soybean oil prices have climbed to their highest levels in more than a year, based on Commodity3 data.
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Palm Oil Outlook Improves
Meanwhile, the surge in global soybean oil prices has not been fully reflected in the Indian domestic market, largely due to the weakening rupee. This mismatch is expected to encourage further soybean oil import cancellations and increase palm oil buying.
“This imbalance could trigger more cancellations of soybean oil purchases and drive higher palm oil imports,” said Mayur Toshniwal, President and Head of Trading at Emami Agrotech Ltd., an Indian vegetable oil processor and biodiesel producer, as quoted by Bloomberg.
The development sends a strong signal to the global vegetable oil market. As soybean oil imports become increasingly costly, palm oil is poised to regain its appeal—particularly in price-sensitive markets such as India, which remains one of the world’s most strategic destinations for palm oil exports. (P2)
