November 28, 2008
India's total area planted to kharif (summer planted) oilseeds this year was up by 5 percent at 15.6 million hectares, with most of the increase confined to soy, according to a USDA attache report posted on Tuesday (Nov 25, 2008).
Marketing year 2008/09 (October-September) soy production is forecast at 9.7 million tonnes, which is up from 9.3 million tonnes last year. In the wake of the recent fall in international prices of edible oils, the government has re-imposed a 20 percent import duty on crude soy oil with effect from Nov 18, 2008, while keeping the duty on refined oil unchanged at 7.5 per cent.
Post has increased the forecast for marketing year 2008/09 edible oil imports by less than 100,000 tonnes to 5.4 million tonnes and oilmeal exports to 5.9 million tonnes from 5.8 million tonnes last year. Assuming demand for Indian soymeal remains steady and prices stay competitive in international markets, soymeal exports are forecast at 4.8 million tonnes which is similar to last year's level.
The total area planted to kharif (summer planted) oilseeds (soy, peanut and sunflower) this year increased to 15.6 million hectares compared with 14.9 million hectares during the corresponding period of last year. Area sown under soy is estimated at 9.6 million hectares, up by 9 percent over last year. The marketing year 2008/09 (October/September) soy production forecast is revised down from Post's earlier estimate of 10.3 million tonnes to 9.7 million tonnes with Madhya Pradesh and Maharashtra accounting for over 85 percent of total production. However, the current crop size is up 5 percent over that of last year (MY 2007/08).
Early sowing, good monsoon rain and strong market prices aided increased planting of soy. However, factors such as uneven rainfall distribution, below normal temperatures prevailing during 'early growth stages' of the crop, and delays in sowing in select pockets of major soy growing regions are expected to constrain soy yields.
Post increased the marketing year 2008/09 edible oil import forecast from an earlier estimate of 5.3 million tonnes to 5.4 million tonnes. Palm and sunflower oil import forecasts are revised up by 300,000 tonnes and 10,000 tonnes to 4.6 million tonnes and 120,000 tonnes respectively, while the soy oil import forecast is revised down by 240,000 tonnes to 660,000 tonnes to reflect the price competitiveness of palm oil over other available oils.
Edible oil imports for marketing year 2007/08 are estimated at 5.3 million tonnes, up 10 percent over last year. Higher imports were due to the steady decline in international prices of edible oils in recent months and anticipation of festival season demand. Since July 2008, prices of crude palm and soy oil have fallen by 52 and 38 percent respectively. With soy oil selling at a premium of US$325 million per tonne over palm oil, its share in the total edible oil import estimate declined by half to just 14 percent while that of palm oil rose to 86 percent.
The marketing year 2007/08 soy oil import estimate has been revised down from an earlier estimate of 800,000 tonnes to 734,000 tonnes, sunflower oil has been revised down from 40,000 tonnes to 18,000 tonnes and the palm oil import estimate is revised up from 4.2 million tonnes to 4.5 million tonnes to reflect higher imports of palm oils.
Marketing year 2006/07 sunflower and soy oil import estimates are revised up from 152,000 tonnes and 1.4 million tonnes to 203,000 tonnes and 1.5 million tonnes respectively, whereas palm oil is revised down from 3.8 million tonnes to 3.2 million tonnes.
With the recent fall in global prices of edible oils and the lower pace of off take from State Government/Union Territories, the Centre has deferred its plan to import edible oil for the Public Distribution System (PDS). On July 17, 2008, the GOI had formally launched the subsidized programme of distribution of edible oils to the below-poverty-line population through the PDS.
The programme was intended to distribute one million tonnes of imported edible oils in marketing year 2008/09 through state governments involving a subsidy of Rs 15 billion (US$312 million). Under the programme, state trading enterprises (STE) such as PEC, MMTC, STC, and NAFED have imported around 350,000 tonnes of edible oils of which 240,000 tonnes had landed in the country and about 143,000 tonnes had been handed over to various State/Union Territories for distribution to ration card holders, to date.
Post has revised up the marketing year 2008/09 oilmeal export forecast to 5.9 million tonnes from an earlier forecast of 5.8 million tonnes. Assuming demand for Indian soymeal remains steady and prices stay competitive in international markets, soymeal exports are forecast at 4.8 million tonnes, similar to last year's level.
With the recent global economic slowdown and consequent decline in international freight rates, export prices of oilmeal have eased considerably. Since July 2008, the FOB prices of soymeal declined by US$215 per million tonnes to US$275-285 per million tonnes. During the same time period, prices of rapeseed meal declined by US$60 per million tonnes to US$180-190 per million tonnes.
Oilmeal exports from October 2007 through September 2008 are estimated at a record 6.5 million tons, up by 30 percent over the corresponding period of last year. Most of the increase was in soy meal and rapeseed meal. Competitive pricing and high demand of Indian oil meal from Asian countries contributed to larger exports.
Marketing year 2007/08 soymeal exports are revised up to 4.8 million tonnes from an earlier estimate of 4.6 million tonnes. The marketing year 2006/07 soy meal exports are revised up from 3,361,000 tonnes to 3,462,000 tonnes.