India cancels more South American soy oil imports as rupee slump widens price gap

India, the world’s largest buyer of vegetable oils, has canceled more soybean oil shipments from South America after the rupee weakened to a record low, widening the price gap between imported and local supplies and prompting refiners to retreat from costly purchases.

Market participants said Indian buyers have increasingly opted to scrap deals — especially for shipments booked months in advance — as currency moves and rising global prices have made imports uneconomical.

Fresh cancellations total 35,000–40,000 tonnes, Patanjali Foods says

About 35,000 to 40,000 tonnes of soybean oil from Brazil and Argentina, booked for delivery in February and the April–July 2026 period, have been scrapped, said Aashish Acharya, vice president at Patanjali Foods Ltd, one of India’s top vegetable-oil buyers.

Several other traders contacted by Bloomberg also confirmed the cancellations.

Acharya added that total cancellations are likely to exceed 50,000 tonnes, reflecting the pressure from a weaker rupee and a sharp rise in global soy oil prices.

December “washouts” exceeded 100,000 tonnes

The latest move follows a wider wave of cancellations in December, when Indian buyers backed out of more than 100,000 tonnes of soybean oil deals from Argentina — roughly 20% of what India imports in a month, the report said.

India relies on overseas supplies for nearly 60% of its edible oil consumption, making procurement highly sensitive to currency swings and import parity pricing.

Imported soy oil now costs $25–$30 more than local supplies

A weaker rupee and higher global prices have pushed the landed cost of South American soybean oil to trade at $25 to $30 per ton higher than local supplies, Acharya said.

“That disparity has made imports more expensive and uneconomical, prompting buyers to cash out, and instead look at the tropical oil which has been trading at attractive discounts,” he said.

Palm oil advantage widens; premium hits about $145 a ton

Soy oil’s premium over palm has doubled since the start of the year to around $145 a ton, according to data compiled by Bloomberg.

The widening spread is expected to push a larger share of Indian demand toward palm oil, which remains the most cost-effective option for price-sensitive buyers.

China buying tightens supplies; Argentina prices near multi-year highs

Supplies of South American soybean oil have tightened as China ramped up purchases of soybeans, reducing availability for crushing into oil, Bloomberg reported.

Nearby prices for Argentinian soy oil are at the highest in more than a year, according to Commodity3 data cited in the report.

Soy oil futures in Chicago have also climbed, but Indian prices did not follow because of the rupee’s weakness, said Mayur Toshniwal, president and head of trading at Emami Agrotech Ltd.

That mismatch may lead to more cancellations and higher palm oil imports, he said. 

Why This Matters

India’s edible oil import market is one of the biggest global demand drivers for soybean and palm oil. Even moderate demand shifts can influence regional pricing and trade flows.

This round of cancellations is a sign that currency volatility is now directly reshaping India’s edible oil buying strategy, forcing refiners to prioritize the cheapest substitute — palm oil — while South American soy oil prices remain elevated.

Summary

• India canceled more South American soybean oil cargoes after the rupee weakened, widening the import cost gap.
• 35,000–40,000 tonnes booked for February and April–July 2026 were scrapped, Patanjali Foods’ VP said.
• Total cancellations are expected to exceed 50,000 tonnes, traders said.
• Soy oil now trades at $25–$30/ton above local supplies, making imports uneconomical.
• Soy oil’s premium over palm has doubled to about $145/ton, increasing incentives to shift to palm oil.

FAQs

Q1: Why are Indian buyers canceling soy oil imports?

Because a weaker rupee and higher global prices have pushed South American soy oil to trade $25–$30 per ton above local supplies, making imports uneconomical.

Q2: How much soy oil has been canceled recently?

Around 35,000–40,000 tonnes have been scrapped in the latest round, with total cancellations likely to exceed 50,000 tonnes, according to market participants.

Q3: What happened in December?

Indian buyers backed out of more than 100,000 tonnes of Argentinian soy oil deals in December, roughly 20% of India’s monthly imports, Bloomberg reported.

Q4: Why is palm oil gaining demand?

Because soy oil’s premium over palm has widened to about $145/ton, making palm oil significantly cheaper for importers.

Q5: What role is China playing in soy oil pricing?

Bloomberg said rising Chinese soybean purchases tightened availability for crushing into oil, pushing nearby Argentinian soy oil prices to the highest levels in more than a year.