Refiners are giving preference to palm oil for May shipments
When war fractures one supply chain, markets do not pause — they redirect. The conflict in Ukraine severed the Black Sea's sunflower oil corridor, and the ripple reached every kitchen and refinery across Asia. Palm oil, suddenly the most affordable option on a tightening shelf, found itself at the center of a global reordering of vegetable oil trade — not by virtue of preference, but by the ancient logic of scarcity and price.
- A $150-per-tonne price gap between palm and soybean oil emerged almost overnight, forcing Asian refiners on thin margins to abandon their usual preferences.
- Ukraine's war severed the Black Sea sunflower corridor — responsible for 60% of world supply — sending sunflower prices surging and leaving buyers scrambling for alternatives.
- Indonesia's decision to scrap domestic sale quotas flooded global markets with palm oil just as rival supplies were tightening, creating a rare window of abundance amid broader scarcity.
- India is moving fast, with palm oil imports forecast to jump from 540,000 tonnes in March to over 650,000 in May, with Bangladesh, Pakistan, and potentially China following suit.
- Palm oil prices, already up 38% since January, may climb further as inventories fall and more buyers lock in bulk purchases for coming months.
By mid-April, the arithmetic of cooking oil had become impossible to ignore. Palm oil had opened a $150-per-tonne discount over soybean oil — a gap that barely existed weeks earlier. For refiners and food manufacturers operating on razor-thin margins across Asia, the math pointed in one direction: switch to palm, and quickly.
The shift was counterintuitive in its origins. In early March, palm oil had actually traded at a premium over its rivals. Then the war in Ukraine changed everything. The Black Sea region supplies 60 percent of the world's sunflower oil and 76 percent of its exports — and that corridor was now fractured. Soybean oil tightened too. Palm oil, meanwhile, grew more available after Indonesia scrapped its domestic sale quota, releasing fresh supply into global markets. By late April, crude palm oil was trading in India at roughly $1,765 per tonne, against $1,930 for soybean and $2,100 for sunflower.
Mumbai-based vegetable oil broker Sandeep Bajoria watched the numbers shift daily. Refiners were already prioritizing palm for May shipments, he noted, with the discount widening further by the hour. India's palm imports were forecast to exceed 600,000 tonnes in April, rising toward 650,000 in May. Bangladesh and Pakistan were placing similar orders, and dealers suggested China could follow if coronavirus lockdowns eased.
The deeper significance lay beyond the immediate purchasing shift. Higher palm demand would lift exports from Indonesia and Malaysia, drawing down inventories and potentially pushing prices — already up 38 percent since January — even higher. The Ukraine war had created a vacuum that palm oil was now filling, not out of preference, but out of availability. The global vegetable oil market was reorganizing itself around scarcity, and palm oil had become its unlikely anchor.
The math was becoming impossible to ignore for anyone buying cooking oil in Asia. By mid-April, palm oil had opened up a $150-per-tonne price gap over soybean oil—a gap that had barely existed just weeks earlier. For refiners and food manufacturers operating on thin margins, that kind of spread meant the difference between a viable quarter and a losing one. The result was predictable: they were switching to palm, and fast.
The shift had been building for months, though the trajectory was counterintuitive. In early March, palm oil had actually been trading at a premium over both soybean and sunflower oils. But the war in Ukraine scrambled everything. The Black Sea region produces 60 percent of the world's sunflower oil and accounts for 76 percent of global exports. With that supply line fractured, sunflower prices climbed sharply. Soybean oil, sourced mainly from Argentina, Brazil, and the United States, tightened as well. Palm oil, by contrast, was becoming abundant. Indonesia had recently scrapped its domestic sale quota, releasing more supply into global markets. By late April, crude palm oil was trading in India at roughly $1,765 per tonne, while soybean oil sat at $1,930 and sunflower at $2,100.
Sandeep Bajoria, who runs a vegetable oil brokerage in Mumbai, watched the numbers shift day by day. "Refiners are giving preference to palm oil for May shipments," he said, noting that the discount had widened even further by Wednesday of that week compared to Tuesday's quotes. For price-sensitive buyers across Asia—the traditional stronghold of palm oil demand—the choice was becoming obvious. India's palm oil imports were forecast to jump to more than 600,000 tonnes in April, up from 539,793 tonnes in March. May could see volumes exceed 650,000 tonnes. Bangladesh and Pakistan were following the same pattern, increasing their orders for May delivery. Even China, dealers suggested, might start buying more if coronavirus lockdowns eased in the coming weeks.
What made this moment significant was not just the immediate shift in purchasing patterns, but what it meant for global commodity markets. Higher demand for palm oil would lift exports from Indonesia and Malaysia, the two countries that dominate global production. As inventories fell and more buyers locked in purchases, prices that had already climbed 38 percent since the start of 2022 could climb further. The Ukraine war had created a vacuum in sunflower supply that palm oil was now filling—not because it was better, but because it was available and cheap. Buyers facing a choice between limited soybean supplies and expensive sunflower oil had only one rational option. The market was reorganizing itself around scarcity and price, and palm oil was the beneficiary.
Notable Quotes
Palm has become lucrative for refiners as it is available at $150 per tonne discount over soyoil. Refiners are giving preference to palm oil for May shipments.— Sandeep Bajoria, CEO of Sunvin Group, a Mumbai-based vegetable oil brokerage
The Hearth Conversation Another angle on the story
Why does a $150-per-tonne discount matter so much to these buyers? That sounds like a thin margin.
For a refiner processing thousands of tonnes a month, $150 per tonne adds up to millions of dollars. When you're competing on price in food manufacturing, that's the difference between profit and loss. It's not thin—it's everything.
So the Ukraine war didn't directly affect palm oil production, but it changed what people buy?
Exactly. Ukraine supplies most of the world's sunflower oil. When that supply vanished, buyers couldn't just wait it out. They needed oil now. Soybean oil got expensive. Palm was sitting there, cheaper and available, because Indonesia had just opened up its domestic quotas.
You mentioned India's imports jumping from 539,000 to 600,000 tonnes. Is that a big number?
It's a 12 percent jump in a single month. And May could be even higher. That's not gradual adjustment—that's a market reorienting itself.
What happens to palm oil prices if this demand keeps climbing?
They should keep rising. More buyers, less inventory, and the discount over soybean oil will eventually compress. But for now, refiners are locking in May shipments at these prices because they know it won't last.
Is there a risk this reverses? What if sunflower supplies come back?
That's the long game. But right now, no one's betting on it. The dealers I read were talking about May and June. Beyond that, it's unclear.