January 5, 2012

Trade executives said Wednesday (Jan 4) that despite output still likely to fall due to lower acreage, the scattered showers and cold weather snap have improved India's rapeseed crop prospect.

Rapeseed output in the year that began October 1, 2011, is likely to be about six million tonnes, down from seven million tonnes the previous year, said Vijay Data, vice president of the Solvent Extractors Association of India.

Rapeseed is India's main winter-sown oilseed and is mainly grown in the north western state of Rajasthan. High daytime temperatures and lower soil moisture due to a lack of winter rainfall during the sowing period of October and November had affected the flowering of the oilseed. The weather has changed in the past two-three weeks, erasing fears of further damage to the oilseed crop.

"We are now optimistic that weather will remain favourable for the next two months," Data said.

In India, rapeseed harvesting normally starts from mid-February or early March. Rapeseed plantings until December 30 were down 5% at 6.46 million hectares.

Analysts said a drop in rapeseed output is likely to increase edible oil imports by the world's top purchaser to around nine million tonnes in the marketing year that started November 1, 2011, from about 8.4 million tonnes the previous year.

Fears of a decline in production have already led to a 27% jump in local rapeseed prices since October 1 to INR3,652 (US$69.12) per 100 kilogrammes.

There may be some correction in the short term after the recent climb but in the long term prices look bullish, said Chowda Reddy, a senior analyst with commodity brokerage firm JRG Wealth Management.

Rapeseed prices may touch INR4,000 (US$75.71) per 100 kilogrammes if there is any weather disruption during the harvesting period, he added.