December 30, 2011


Indian rapeseed output may drop by 21%



The rapeseed production in India may decrease by 21% this year because of unfavourable weather, according to a processors group.


Output may drop as much as 21% to 5.5 million tonnes in the crop year that started October 1, from seven million tonnes a year earlier, Vijay Data, vice president of the Solvent Extractors' Association of India, said. Lower production and rising domestic demand may boost vegetable oil imports to more than nine million tonnes this year from 8.67 a year earlier, he said.


An increase in Indian purchases may help pare losses in Malaysian palm oil prices, heading for the first annual decline since 2008 on higher global production and concern that demand may be curbed by the European debt crisis. The South Asian nation meets almost 50% of its edible oil demand through imports and is the largest palm oil buyer from Indonesia and Malaysia, the top producers.


"Lower production expectations and cold weather conditions in the growing areas will boost prices," Vimala Reddy, an analyst at Karvy Comtrade Ltd., said "We may see a decline of 5-10% in India's vegetable oil production."


Rapeseed for delivery in January on the National Commodity & Derivatives Exchange Ltd. jumped as much as 2.9% to INR3645 (US$68) per 100 kilogrammes.

Prices may jump by 6% in two months before harvesting picks up pace, Reddy said.


Rapeseed was sown in 6.38 million hectares (15.8 million acres) as of December 23, compared with 6.78 million hectares a year earlier, the farm ministry said.


Overall planted area under rapeseed is 4-5% less than a year ago "as we didn't receive rains in the last quarter of this year," Data said. "So late sowing was not possible" in Rajasthan state, the biggest grower, he said.


Rapeseed, usually planted from October to November and harvested from February to March, accounts for more than 70% of the nation's output of winter-sown oilseeds. Its yellow-coloured oil is the third-most used cooking oil in India after palm oil and soy oil.


Exports of rapeseed meal (RPM0HMM1) from India may be less than one million tonnes this year, compared with 1.2 million tonnes a year earlier, Data said.


"The dollar is costlier so we are getting better prices for meal exports, but if you do not have enough stocks you cannot export," he said. "Consumption in India is also growing."


India's rupee is Asia's worst performer this year, losing 16% and reaching a record low of 54.305 a dollar on December 15 on concerns Europe's debt crisis will slow the global economy and damp demand for emerging-market assets.


Overseas purchases (SEAIETTL) of palm oil and soy oil may be unaffected by the plunge in the rupee as demand remains robust and stockpiles low, Data said.


"Imports will certainly be over nine million tonnes due to less production," Data said referring to India's overall vegetable oil purchases. "There may be some shrinkage in oil consumption as the cost of all imported oils has gone up by 20-25%."

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