June 23, 2008

   

India's oilseed crushers await next crop amid high grain prices

India edible oil prices were mixed during the week ended Friday as supply tightness continued to support soyoil prices.

 

Low availability of soy, the main oilseed grown in the country, has lead many mills in the country to cease operations until the new crop, currently being sown, arrives in October. The temporary closure is affecting soyoil supply.

 

According to government data released Friday, area under oilseed cultivation during June 1-19 was 467,000 hectares, up from 388,000 hectares a year ago.

 

Area under groundnut cultivation was 237,000 hectares, up 25.3 percent from 189,000 hectares, the government data showed.

 

This year, soy acreage is expected to rise by up to 10 percent from last year's 8.7 million hectares as farmers in the provinces of Maharashtra, Gujarat, Madhya Pradesh and some southern provinces switch from crops such as pulses to soy thanks to strong soyoil demand, industry experts said.

 

Although the government has announced the sale of edible oils at subsidized rates from July, additional supply is unlikely to lower prices due to overwhelming local demand.

 

The government plans to distribute 1 million tonnes of imported edible oils at a subsidy to lower-income households.

 

The four state-run trading houses, namely PEC Ltd., MMTC Ltd., State Trading Corp., and National Agricultural Cooperative Marketing Federation, have contracted to import 179,000 tonnes of edible oils till now, the government said.

 

India's edible oil market directly affected by international markets as the country imports nearly half of its annual edible oil demand.

 

It buys soyoil from Argentina and Brazil and palm oil from Malaysia and Indonesia.

 

Local refined soyoil was at INR67,300/tonne Friday, up from INR65,500/tonne a week earlier.

 

(US$1 = INR42.98)