August 4, 2008


India edible oil down as good rains buoy soy prospects


Indian edible oil prices continued to trend lower during the week ended Friday (August 1) as good rains over the past week buoyed output prospects for oilseeds in the country.


Southern, central and western parts of the country did not get much rain in the first few weeks of July, which had raised concerns that output might fall.


"The rains this week have come as a boon for the soy crop in Madhya Pradesh and Maharashtra states (key growing areas), and this augurs well for overall national soy output," said Rajesh Agrawal, a current member and past chairman of the Soybean Processors' Association of India.


He said the crop may exceed, or at the very least equal, last year's record crop of 10 million tonnes.


As of July 24, the area used for oilseeds was 13.45 million hectares compared with 13.69 million hectares a year earlier.


Soy, the main oilseeds grown in India, was planted on 8.54 million hectares, up from 7.78 million hectares a year earlier. However, groundnuts were sown on less area at 3.49 million hectares compared to 3.86 million hectares a year earlier.


Prices were lower the last few weeks on poor demand locally and tracking weakness in overseas edible oil markets.


"Demand in the local markets continues to be weak for soyoil as refiners prefer buying palm oil, which is cheaper," said Mahesh Agarwal, a trader based in Madhya Pradesh.


Around 260,000 tonnes of edible oil was imported by state-run agencies between April 1 and July 30 as part of a federal government plan to import 1 million tonnes of edible oil in the current financial year that ends in March to sell to low-income households at discounted rates.


Local refined soyoil was traded at INR61,800/tonne, down from INR62,200/tonne a week earlier.


US$1 = INR42.225 as of August 4, 2008

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