Material Insights · Understanding the Material World

Palm oil and Sunflower

Sunflower oil from the Black Sea and palm oil from Southeast Asia compete for India's frying and cooking oil demand, so a supply shock in one, as in 2022, sends buyers to the other and lifts both prices.

Palm oil (commodity) and Sunflower (commodity): 4 relationships.

How they are linked

1. Price link: substitute oil

Cost and price · Strong · Both ways

Sunflower and palm oil compete for frying and food use, and Indian refiners switch between them on price, so their prices move closely.

  • 0.66 monthly change correlation
  • 0.87 12-month change correlation
  • 0.84 fitted elasticity

A 12-month correlation of 0.87 means the two share almost the same trend. The link holds because both are traded in bulk to the same import markets; it weakens briefly when a shock closes one supply route before buyers can switch.

Sources: Material Insights (World Bank, FRED, IMF data)

2. Substitute cooking oils

Substitution · Strong · Buyers switch between palm and sunflower oil

Both are used for cooking and frying in India, so when one becomes scarce or dear, refiners and packers buy more of the other.

  • 3.5 Mt India's record sunflower oil imports, 2023/24
  • 2.28 Mt India's sunflower oil imports, September 2024 to July 2025, down 22%
  • 7.58 Mt India's palm oil imports, 2024/25

Palm oil is semi-solid at room temperature and sunflower oil is liquid, so they suit somewhat different products and switching is partial rather than complete. In 2024/25 lower Black Sea supply cut India's sunflower imports while soybean oil, not palm, took most of the gap.

Sources: The Edge Malaysia (Reuters); OFI Magazine (APK-Inform data); Tridge (UkrAgroConsult)

3. Shocks spread across oils

Shared risk · Strong · A shock to one oil lands on the other

Sunflower oil exports are concentrated in Ukraine and Russia and palm in Indonesia and Malaysia, so a disruption in either region sends buyers to the other and lifts both prices.

  • 46% Ukraine's share of world sunflower oil exports, 2022
  • $470.50/t one-week rise in Black Sea sunflower oil price to $1,950.50, late February 2022
  • 28 April 2022 start of Indonesia's palm oil export ban

In 2022 Russia's invasion closed Ukrainian ports, and Indian buyers, who were taking about 250,000 t of sunflower oil a month, turned to Malaysian crude palm oil, pushing palm futures above MYR 8,000 per tonne. Weeks later Indonesia announced its export ban, so both substitutes were hit at once and India faced a price shock on all cooking oils.

Sources: S&P Global Commodity Insights; Quartz

4. Indian import duties

Policy · High in India · India's duty settings shift buying between the two oils

India sets basic customs duties for each crude and refined oil, so the gap between the duties on palm and sunflower oil adds to or offsets the gap in their world prices.

  • nil basic customs duty on crude sunflower oil from 24 September 2026, down from 10%
  • 5% basic customs duty on crude palm oil from 24 September 2026, down from 10%
  • 22.5% and 27.5% basic customs duty on refined sunflower and refined palm oil from September 2026

From May 2025 the two crude oils carried the same 10% duty, after a cut from 20%, so the choice between them followed world prices and freight. The September 2026 cuts, made to ease prices before the festive season, opened a five-point gap in sunflower oil's favour for both crude and refined oil, so a Black Sea discount now passes into Indian buying with extra force.

Sources: All India Radio News; Business Today

For investors

Key learnings

  1. Palm and sunflower oil are among the tightest price pairs, with a 12-month correlation of 0.87.
  2. Supply is concentrated in two regions, the Black Sea and Southeast Asia, so a shock in either lifts both, as in 2022.
  3. India is the swing buyer: its sunflower imports fell 22% to 2.28 Mt in September 2024 to July 2025 when Black Sea supply was short.

What to track

  • Black Sea sunflower oil price against crude palm oil: A widening gap shifts Indian buying between the oils (Weekly · Argus, APK-Inform, Bursa Malaysia)
  • Ukraine and Russia sunflower crop and export pace: Weak crops tighten sunflower oil and push buyers to palm (Monthly · USDA FAS, APK-Inform)
  • Indonesian palm export levies and quotas: Curbs raise palm prices and sunflower demand (As announced · Indonesian trade ministry)

For policymakers

Key learnings

  1. India depends on two concentrated supply regions for these oils, so stocks and source diversity, including soybean oil, are its main buffers.
  2. Russia supplied about 58% of India's sunflower oil imports from September 2024 to July 2025, so trade relations with Russia now matter for cooking oil prices.
  3. Since September 2026 India's duties favour sunflower oil, with crude sunflower duty free against 5% for crude palm, which deepens exposure to Black Sea supply if buyers shift.

What to track

  • India's sunflower oil imports by origin: Shows reliance on Russia and Ukraine (Monthly · Solvent Extractors' Association)
  • Edible oil import duties and stock limits: Changes signal policy response to price shocks (As notified · CBIC, Department of Food and Public Distribution)

India

India is the world's largest edible oil importer; from September 2024 to July 2025 Russia supplied about 58% and Ukraine 23% of its sunflower oil, while palm came from Indonesia and Malaysia, so two separate geopolitical risks feed the same kitchen oil market.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Malaysian palm oil orders surge as buyers cover for shortfall in Ukraine sunflower oil, S&P Global Commodity Insights (2022)
  3. The global supply of cooking oil is going to reel from a new export shock, Quartz (2022)
  4. India's annual palm oil imports to fall behind soft oils for first time, industry official says, The Edge Malaysia (Reuters) (2025)
  5. India retains position as leading importer of Ukrainian sunflower oil in current season, OFI Magazine (APK-Inform data) (2025)
  6. Centre reduces basic custom duty on crude palm oil, crude soyabean oil and crude sunflower oil to 10%, All India Radio News (2025)
  7. India summarizes its vegetable oil imports for the MY 2024/25, Tridge (UkrAgroConsult) (2025)
  8. Govt cuts customs duty on edible oil ahead of festive season, Business Today (2026)