- Rising Indonesian biodiesel mandates continue to tighten palm oil exports, boosting long-haul soybean oil flows from the Americas to Asia.
- These shifts have supported tonne-mile demand for MR chemical tankers, driven by longer sailing distances.
- However, potential approval of GM soybean imports under a US–India trade deal could curb vegoil imports and soften tanker demand.
A tightening palm oil supply landscape remains the dominant force shaping global vegetable oil trade. With Indonesia increasing its biodiesel blending mandate from B30 (2023) to B40 (2025) and targeting B50 in mid-2026, more than 13.6 million tonnes of palm oil now feed domestic biofuel production, up from 11.9 million tonnes in 2023.
Exports have fallen sharply as a result. Shipments dropped 17% year-on-year in 2024, with only a marginal recovery in 2025. For major importers like India, the price gap that once favored palm oil has closed, pushing buyers toward soybean oil.
This shift benefits the tonne-mile profile of the trade. Cargoes from Latin America sail nearly four times the distance of cargoes from Southeast Asia, translating into stronger MR chemical tanker demand.
Price Parity Fuels Soybean Oil Share Gains
For years, soybean oil carried a $150/tonne premium, but tight palm availability has erased that spread. Since 2023, soybean oil has steadily increased its share in India’s vegetable oil imports, replacing shorter-haul palm cargoes with longer voyages from Brazil, Argentina, and the US Gulf.
With Indonesian exports likely to tighten again in 2026 under B50 mandates, this long-haul trend would strengthen further — provided production in the Americas remains stabl,e and sunflower oil shortages do not deepen the supply strain.
US–India Trade Negotiations Introduce a Critical Variable
The most significant downside risk now comes from the ongoing trade discussions between Washington and New Delhi. If India relaxes its stance on genetically modified soybean imports, increased domestic crushing could reduce its reliance on imported vegetable oils altogether.
Such a shift would limit long-haul flows from the Americas and restrain tonne-mile demand, particularly in the MR tanker segment that has benefited most from the trade realignment of the past two years.
Did you subscribe to our daily Newsletter?
It’s Free — Click here to Subscribe!
Source: Drewry
