July 24, 2012

 

India's 2012-13 edible oil shipments likely up 10%

 

 

In case poor monsoon rainfall cuts planting and hurts harvests of oilseeds such as soy and groundnut, India's edible oil imports in the year from November 2012 may increase by as much as 10%, the country's leading edible oil importer said.

 

India, the world's biggest edible oil importer, buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.

 

"Normally poor rainfall does affect the yield of oilseeds," Dinesh Shahra, managing director, Ruchi Soya, told Reuters in an interview on Monday (July 23).

 

"If oilseeds production goes down, next year imports are likely to go up by around 5-10%," he added.

 

Key oilseeds growing states in India like Maharashtra, Madhya Pradesh, Rajasthan and Gujarat have so far received sharply lower rainfall than average since the beginning of the monsoon season on June. 1.

 

Indian farmers have cultivated summer-sown oilseeds on 10.88 million hectares as of July 20, down from 12.14 million hectares during the same time a year ago, farm ministry data showed.

 

The south Asian country's total edible oil imports in the current year ending October 31 could rise 13% to 9.5 million tonnes, from 8.4 million tonnes last year, Shahra said. India imported 6.25 million tonnes edible oil between November to June compared with 4.94 million tonnes during the same period a year ago as importers stepped up purchases earlier this year expecting a higher duty on imports.

 

Output of soy, which has lower oil content than groundnut and rapeseed, in 2012-13 might exceed the industry's previous year estimates of 10.65 million tonnes as farmers expand acreage to cash in on a record high price. The area planted with soy is likely to rise 10% this year although yields will depend on progress of the monsoon rains, Shahra said.

 

"Assuming the monsoon progresses reasonably well going forward, with the increased acreage, we may see a crop of 10.5-11 million tonnes," Shahra said.

 

The output figure from the Central Organisation for Oil Industry & Trade (COOIT) is below government estimates of 12.74 million tonnes but is used by the industry as a benchmark.

 

The key August soy contract on India's National Commodity and Derivatives Exchange hit a record high of INR5,064.5 (US$90) per 100 kilogrammes last week, tracking a rally in the US. Soy prices in India have nearly doubled in 2012. Demand for Indian soymeal is very good, especially from Iran, as hot weather has slashed the crop in Latin America and the US, Shahra said.

 

"The USA has witnessed one of the worst droughts. South America also is going through adverse weather conditions. There will be opportunities for the exporters," he said.