New Delhi [India], May 5 : Indian refined sunflower oil volumes are projected to witness a decline of 8-10 per cent in FY25 amid decline in demand of sunflower oil.
According to a report by CRISIL Ratings, domestic consumers have returned to soybean oil after the prices have declined following a good soy harvest.
The report further highlights that despite this shift sunflower oil refiners are expected to experience a 50-60 basis points expansion in profitability, attributed to stable prices, effective hedging policies, and the government's commitment to continuing duty-free imports.
"With a bumper crop, the price of soybean oil is likely to correct by USD 100 per tonne on-year and be on a par with sunflower oil in fiscal 2025. The resultant shift in consumption towards soybean oil will lower sunflower oil volume to 28-29 lakh tonne in fiscal 2025 from 32 lakh tonne in fiscal 2024, although volume would remain higher than the historical average of five years through fiscal 2024" said Jayashree Nandakumar, Director, CRISIL Ratings.
The report also shares that despite an anticipated decline in volumes, the prices of refined sunflower oil are expected to hold steady due to high shipping and freight costs amid the ongoing geopolitical uncertainties in the Middle East.
"Despite the degrowth, profitability of refiners would improve 50-60 bps supported by favourable spreads on robust demand and no anticipated sharp fluctuations in prices. Also, refiners have firm hedging policies in place to avoid downside price risks" said Rishi Hari, Associate Director, CRISIL Ratings.
The Indian edible oil landscape is primarily dominated by palm oil, comprising approximately 40 per cent of total volumes, followed by soybean oil and sunflower oil with shares of 20 per cent and 15 per cent respectively. Sunflower oil demand is intricately linked to the pricing dynamics of its substitutes, particularly palm oil and soybean oil.
India houses significant sunflower oil refining capacities and imports over 95 percent of its sunflower crude requirement. While refined sunflower oil is predominantly consumed within the country, the movement in its prices largely depends on that of imported crude.
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