India has canceled over 35,000 tons of soybean oil imports from Russia and South America as prices soar $30-40 above palm oil alternatives. Patanjali Foods Ltd., a major buyer, confirmed axing 25,000 tons from Russia and 6,000-8,000 tons from South America, disrupting Q2 supply plans. The $30-40/ton premium for soy over palm oil—its widest since 2023—has forced traders to pivot, with nearby palm shipments costing $60-70 cheaper per ton, per Sunvin Group executives.

The cancellations compound earlier washouts totaling 100,000+ tons this year, driven by a weak rupee and Middle East instability. US attacks in Iran have spiked biodiesel demand, pushing global vegetable oil prices 8-10% higher this week. Market analysts warn this shift could reshape India’s $20B edible oil imports, favoring Southeast Asian palm producers.

Buyers like Patanjali are accelerating palm oil purchases, with $60-70/ton discounts making it economically viable. This pivot risks long-term contracts with South American and Russian suppliers, potentially triggering renegotiations or defaults. The $200M+ in canceled deals underscores India’s vulnerability to commodity volatility and geopolitical shocks.

India’s soybean oil cancellations highlight a critical turning point in global edible oil trade dynamics. With palm oil’s cost advantage widening and biodiesel demand surging, traders face mounting pressure to adapt or face losses. The ripple effects may reshape agricultural supply chains across Asia and South America.