May 16, 2012

 

India's 2012-13 soy acreage up 7% due to high prices

 

 

Driven by record high prices and as lower returns from cotton and castor encourage a shift in planting, India's soy acreage is seen rising 7%, while that of groundnut, another key summer-sown oilseed, is expected to rise 10% in 2012-13.

 

The rise will help the world's top importer of edible oils to cap rising overseas buys and to raise oilmeal exports to Asian countries at a time soymeal supplies from South America are falling, industry officials told Reuters.

 

Cotton prices in the spot markets have halved since hitting a record high in 2011, while castor prices dropped 35% during the same period.

 

"Definitely we will see a shift towards oilseeds from other crops as prices are very attractive," said B.V. Mehta, executive director of Solvent Extractors' Association of India (SEA), a Mumbai-based trade body.

 

Earlier this month, soy futures on India's National Commodity and Derivatives Exchange hit a record high of INR3,785 (US$70.36) per 100 kilogramme, while spot groundnut price touched a record high of INR6,500 (US$121).

 

"We can see higher acreage in Maharashtra, Andhra Pradesh, Karnataka and Rajasthan....price fall in cotton is likely to encourage farmers to go for soy," said Rajesh Agrawal, chief co-ordinator at the Soy Processors Association of India.

 

The four states and the central Indian state of Madhya Pradesh are the country's major producers of soy and groundnut.

 

"Conservatively, we are estimating a rise of around 7% (for soy)," Agrawal said.

 

In 2011-12, soy acreage was 10.3 million hectares and groundnut plantation was 4.3 million hectares during the summer season.

 

"Higher cotton and castor prices lead to lower groundnut sowing in 2011-12. But cotton prices fell sharply. So again, we can see farmers tilting towards groundnut," SEA's Mehta said.

 

The groundnut acreage in the country is likely to rise by more than 10% in 2012-13, said a leading edible oil trader from Rajkot, in the western Indian state of Gujarat, who declined to be named.

 

Most Indian farmers begin cultivating soy and groundnut in June after the arrival of the monsoon rains. India's weather office has forecast a normal monsoon this year, but traders are concerned about the emergence of El Nino weather pattern during the season, which could trim rainfall and subsequently, yields.

 

Soy crop is planted once a year, while groundnut is cultivated twice. The country's edible oil imports in the year ending October 2012 are likely to rise 6.3% from a year earlier to 8.9 million tonnes. India buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.