December 17, 2007

 

India '08 rapeseed output may fall 9 percent on lower acreage

 

 

India's rapeseed crop is showing minor signs of recovery after recent rains in the key growing provinces of Rajasthan and Madhya Pradesh, but overall production is still expected to be lower on-year due to a sharp fall in acreage, the head of the country's largest rapeseed oil extraction company by volume said Friday (December 16).

 

"The late showers in Rajasthan and Madhya Pradesh have marginally improved the crop prospects, and now we estimate that production will be around 5.2 million-5.3 million metric tonnes as against earlier estimates of below 5.0 million tonnes," said Ramesh Garg, chairman of KS Oils Ltd. (526209.BY).

 

In 2007, India produced around 5.8 million tonnes of rapeseed, compared with 6.8 million tonnes the previous year.

 

India's rapeseed production is crucial in determining the country's overall edible oil imports as the oilseed has higher oil content.

 

According to the latest government data, India's rapeseed acreage is down around 12 percent as of December 6 at 5.59 million hectares.

 

"The area traditionally meant for sowing rapeseed has been largely diverted towards wheat, while the unusually warm weather at the time of sowing also kept farmers away from the oilseed," Garg said.

 

Because of the fall in rapeseed production, the country's overall edible oil imports might jump 17 percent to 5.5 million tonnes in the crop year that started in November, he said.

 

"Last year, state-run National Agricultural Cooperative Marketing Federation of India and private traders had carryover stocks of around 1.5 million tonnes of rapeseed which prevented any sharp rise in overall edible oil imports, but this year the ending stocks will come down to just around 500,000 tonnes which will necessitate higher imports," Garg added.

 

India largely imports its edible oil requirements from Malaysia, Indonesia, Brazil and Argentina.

 

Garg said rapeseed prices at the start of this year could reach an all-time high of INR20,000/tonne due to local and international factors.

 

"Locally, there is a shortage of winter-sown rapeseed, while global edible oil prices are passing through one of their best bullish phases, which should boost domestic oilseed prices as well," he added.