Global Conflicts Disrupt Supply, Drive Up Costs

Escalating geopolitical tensions in the Middle East and the ongoing conflict in Eastern Europe have significantly disrupted global edible oil supply chains. Vessels are rerouting via longer passages, such as around the Cape of Good Hope, increasing travel time and shipping costs. Furthermore, higher war-risk insurance is directly adding to import costs. Average import prices have climbed to approximately USD 1,420-1,440 per tonne, significantly higher than the average over the past year of USD 1,275 per tonne. On top of global price increases, a weaker Indian rupee and higher shipping costs are further inflating the price of importing key edible oils, with crude sunflower oil import costs reaching ₹114 per kilogram in September 2025. This translates directly into higher retail prices for refined sunflower oil, which is currently trading around ₹170-175 per litre, up from ₹150 per litre in January 2026.

Consumers Seek Cheaper Oils, Refiners Gain Temporary Profit Buffer

The sustained price hikes are causing consumers to change their buying habits. With refined sunflower oil becoming costlier, consumers are turning to cheaper alternatives such as rice bran and soybean oils, which are currently trading at a discount of ₹10-20 per litre. This shift due to prices is a major challenge for sunflower oil demand. Interestingly, even as sales volumes drop, refiners are seeing a temporary boost in profits. Higher earnings per litre are expected to balance out lower sales volumes, keeping total revenue stable. Moreover, refiners are benefiting from gains from selling existing stock bought at lower prices, which are helping to offset the impact of lower sales volumes. However, this support is temporary. Typically, refiners maintain raw material stock for 30-45 days, but now have only 20-30 days' worth due to slower replenishment cycles and supply uncertainties made worse by the conflict. This lower inventory position, while providing near-term liquidity, makes them more vulnerable if disruptions continue.

Market Dependence and Competitor Risks

India uses about 25-26 million tonnes of edible oil annually, importing around 60% of this. Sunflower oil constitutes about 12-14% of this consumption, and India traditionally relies on Ukraine and Russia for 70-90% of its sunflower oil imports. This dependence leaves the industry vulnerable to global political events. Key domestic companies like Adani Wilmar, a leading branded edible oil seller with an estimated 18% market share, and Patanjali Foods (around 8% share) face risks from these import price swings. While Adani Wilmar has a strong supply chain and various products, its sunflower oil business faces direct cost increases. Companies focusing on local oils like rice bran oil or those with good hedging plans might handle the situation better. A recent price mismatch for soybean oil, where import costs ($1,050-$1,070/mt) are higher than local prices ($1,020/mt), has caused contract cancellations. This shows market imbalance and potential financial risks for importers.

Underlying Risks and Shifting Consumer Habits

The current stable profits for refiners are only a temporary shield against deeper issues. The main problem is India's heavy reliance on imported edible oils, especially sunflower oil from the unstable Black Sea area. While current stock gains are providing relief, ongoing high import costs from conflicts, longer shipping, and a weaker currency will eventually squeeze profits once cheaper stock runs out. The move towards cheaper oils like rice bran and soybean oil isn't just a temporary reaction to prices. It could signal a permanent change in what consumers prefer, especially if the price difference continues. This could mean a long-term drop in demand for sunflower oil, hurting refiners focused on it. Furthermore, having only 20-30 days of stock, down from the usual 30-45 days, shows significant supply chain strain and increases the risk of running out of stock or sharp price increases if more disruptions happen. The sector is in a difficult spot: passing costs to consumers risks losing them, while absorbing costs means lower profits.

Outlook Challenging Amid Price Hikes and Consumer Shifts

The future looks uncertain for India's refined sunflower oil sector due to ongoing global conflicts and rising commodity prices. If supply chain problems don't ease or new import sources aren't found, prices will likely stay high, pressuring both refiners and consumers. The move to cheaper oils is likely to continue and could permanently reduce sunflower oil's market share. Government plans like the National Mission on Edible Oils-Oilseeds (NMEO-OS) and Oil Palm (NMEO-OP) aim to boost local production and cut import reliance, but these are long-term solutions. Meanwhile, the industry must navigate unstable global markets, manage lower stock levels, and keep customers despite big price differences. The near future points to a tough period where temporary profit cushions will be tested by ongoing cost pressures and a growing consumer move towards cheaper cooking oil options.