Palm oil demand is expected to jump in coming months, driven by a widening discount to rival vegetable oils.

Higher demand for palm oil could lift Indonesian and Malaysian exports and bring down inventories, supporting prices , which have already jumped 38% so far in 2022 as the war in Ukraine has disrupted supplies of sunflower oil.

“Palm has become lucrative for refiners as it is available at $150 per tonne discount over soyoil,” said Sandeep Bajoria, chief executive of Sunvin Group, a Mumbai-based vegetable oil brokerage and consultancy firm.

“Refiners are giving preference to palm oil for May shipments.”

Bajoria was referring to Tuesday prices, but on Wednesday the discount had widened further.

Crude palm oil (CPO) was being offered in India at about $1,765 a tonne, including cost, insurance and freight (CIF), for May shipments, compared with $1,930 for crude soybean oil. Crude sunflower oil was offered at around $2,100, dealers said.

In early April, the discount for crude palm oil was $40 per tonne.

Price-sensitive Asian buyers have traditionally relied on palm oil because of its low cost and short shipping times, but in early March it was trading at a premium over soyoil and sunoil.

India’s palm oil imports in April are likely to rise to more than 600,000 tonnes from 539,793 tonnes in March, and in May the imported volume could exceed 650,000 tonnes, said a Mumbai-based dealer with a global trading firm.

Like India, Bangladesh and Pakistan are also buying more palm oil for May shipments, said a Singapore-based dealer with a global trading firm.

“Even China could increase buying if the coronavirus outbreak is contained in the next few weeks,” the dealer said.

Buyers must choose between soyoil and palm oil, because of the limited supply of sunflower oil, said a New Delhi based dealer.

Countries around the Black Sea account for 60% of world sunflower oil output and 76% of exports, while Indonesia and Malaysia account for the bulk of global palm oil shipments. Argentina, Brazil and the United States are key soyoil suppliers.

“Soyoil supplies are limited in South America. Palm oil supplies have improved after Indonesia scrapped a local sale quota. So, buyers are going with palm oil, which is also cheaper,” the dealer in New Delhi said.