New Delhi, Dec. 1, 2025 — In a strategic move to safeguard against potential price spikes in the global vegetable oil market, Indian buyers have secured unusually long-term contracts for soybean oil supplies covering the four months through July 2026. The forward purchases come amid expectations that palm oil — the world’s most widely used edible oil — is poised for a substantial price rise next year.
According to Aashish Acharya, Vice President at Patanjali Foods Ltd., traders have contracted more than 150,000 tons of South American soybean oil for each month from April to July 2026. Such extended coverage is rare in India’s vegetable oil market, where purchases are typically made closer to delivery.
Soy Gains Edge Over Palm Due to Unusual Price Discount
Acharya said the aggressive buying was prompted by soybean oil’s $20–$30 per ton discount to palm oil during the buying window — an inversion of the usual trend, as soy generally trades at a premium. The price advantage made forward bookings attractive at a time when traders anticipate tightening global palm oil supplies.
Indonesia’s B50 Biodiesel Plan Spurs Hedging
Industry players expect palm oil prices to strengthen as Indonesia, the top producer, prepares to increase its biodiesel blending mandate from 40% to 50% in late 2026. Market watchers believe a partial rollout could begin earlier, potentially as soon as the second half of 2026, significantly absorbing exportable palm oil.
“This is a major forward coverage move,” said Mayur Toshniwal, President and Head of Trading at Emami Agrotech Ltd. “The market is preparing for reduced palm availability next year, especially once Indonesia pushes ahead with B50.”
Budiman Suwardi of Prime EcoHarvest Commodities echoed that view, noting that if Indonesia accelerates the policy, global palm oil prices could jump sharply due to supply constraints.
Concerns Rise Over Sunflower Oil Output
Compounding the uncertainty, traders are monitoring potential shortages in sunflower oil, as lower-yielding Black Sea and European crops may squeeze global output. According to Anilkumar Bagani of Sunvin Group, tighter sunflower supply could intensify competition among edible oils.
Acharya added that sunflower oil shipments from the Black Sea region are currently priced $230–$250 per ton higher than South American soybean oil for April–July delivery, deepening soy’s comparative appeal.
Near-Term Market Still Favors Cheaper Palm Oil
Despite the forward buying frenzy, palm oil remains the least expensive option today, with every ton of palm trading $90–$100 cheaper than soybean oil. This pricing gap has led some Indian buyers to cancel 25,000–35,000 tons of soy oil cargoes, as domestic rates have softened by nearly $50 per ton.
As a result, overall demand for soybean oil imports has remained subdued, even though winter typically boosts consumption due to palm oil’s tendency to solidify in cooler temperatures.
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