July 15, 2009

Dry weather in India is the main threat to the global oilseed supply and demand balance, Hamburg-based oilseeds analysts Oil World said on Tuesday (July 14).

Oil World said that there was increasing evidence a lack of rain in India, Indonesia and Malaysia was due to the El Nino weather pattern although the impact was still difficult to assess.

It said a failure in Indian oilseed production would sharply raise the country's import requirements of vegetable oils and export supplies of oilmeals.

India had its driest June in 83 years, followed by subnormal rainfall in the first week of July, reducing water levels at its biggest reservoirs and disrupting sowing of key crops.

Some Indian oilseed production regions received less than 50 percent of normal rainfall between June 1 to July 7, delaying plantings of soy and other crops, Oil World said.

It said that Indian output of soy and other crops could be "drastically reduced" unless weather improves this week, but continuing drought in Argentina may help world soy supplies as Argentine farmers turn from wheat to soy.

It also said that with wheat plantings down by more than 50 percent from the normal level, there is more land which can be cultivated with soy later this year.

It estimated that Argentine soy plantings will reach a record of around 19.0 million hectares, taking place mainly in October to December 2009, up steeply from 17.5 million hectares last year and an average of 15.5 million hectares in the preceding five years, but successful Argentine soy plantings would depend on rain by September.