India is reportedly canceling more South American soybean oil cargoes as the rupee's slump widens the price gap between local and imported oil. About 35,000 to 40,000 tons of soybean oil from Brazil and Argentina, scheduled for delivery in February and April-July, have been canceled, and total cancellations are likely to exceed 50,000 tons. This information comes from Aashish Acharya, Vice President at Patanjali Foods Ltd. Other traders have confirmed this action.

This recent development follows Indian buyers backing out of over 100,000 tons of Argentinian deals in December, which is about 20% of the country's monthly imports. India relies heavily on imports, with nearly 60% of its edible oil consumption coming from overseas.

The combination of a weaker rupee and higher global prices has increased the cost of South American soy oil, making it $25 to $30 per ton more expensive than local supplies. This price difference has made imports uneconomical for buyers, prompting them to seek alternatives such as tropical oil, which is trading at a discount. The premium of soy oil over palm oil has doubled since the start of the year, reaching around $145 a ton.

Supplies of South American soybean oil have become tighter as China has increased its purchases of soybeans, reducing the availability for crushing into oil. Prices for nearby Argentinian soy oil are at their highest in over a year, according to Commodity3 data. While soy oil futures in Chicago have increased, Indian prices have not followed suit due to the weakening rupee. Mayur Toshniwal, President and Head of Trading at Emami Agrotech Ltd., suggests this mismatch could lead to further cancellations of soy oil deals.