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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

09 March 2012

USDA GAIN: India Oilseeds & Products Update February 2012USDA GAIN: India Oilseeds & Products Update February 2012

Poor winter rains and lower oilseed area in Rajasthan have not only reduced rabi (winter sown) oilseed planting to 8.1 million hectares, but also reduced the net availability of oilseeds for crushing into edible oils. Total edible oil imports through Marketing Year (MY) 2011/12 will rise 11 percent to 9.1 million tons on strong domestic demand. Recent volatility in exchange rate has cut the profit margins of oil meal exporters. Considering strong domestic demand for oil meals, total oil meal exports will drop 8 percent to 5.3 million tons.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed


According to the latest progressive planting report from the Indian Ministry of Agriculture, the total area planted to rabi (winter) oilseeds, which include rapeseed-mustard, sunflower, and peanuts, declined 3.7 percent to 8.1 million hectares.

Rapeseed-mustard planted area was down 7.6 percent to 6.7 million hectares, mainly due to lower oilseed area in Rajasthan. Following good monsoon rains in kharif 2011, farmers were encouraged to plant more area to soybeans, leaving less fallow land for planting rapeseed and mustard. Additionally low winter rains and unfavorable weather conditions during crop establishment discouraged rapeseed- mustard planting, particularly in Rajasthan.

Concurrently, a shift to other remunerative crops further constrained rapeseed-mustard area expansion. Good returns from the wheat crop planted last year coupled with a significant hike in the Minimum Support for wheat Price (up 9.4 percent over last year) for the current rabi (winter) season prompted farmers to plant additional area to wheat at the expense of rapeseed-mustard (pan India, wheat acreage was marginally higher, but was up 13 percent in Rajasthan).

Based on an initial crop assessment, rapeseed-mustard production for marketing year (MY) 2011/12 is estimated at 6.3 million tons, down 800,000 tons from last year. Further, industry observers believe that the prolonged cold spell and intermittent rains observed during crop growth across major rapeseed-mustard growing regions may potentially reduce yields and consequently result in a further decline in production.

The winter planted sunflower crop also witnessed poor rains (northeast monsoon) and erratic weather conditions, consequently bringing down planted area by 22 percent to 476,000 hectares. As a result, total sunflower acreage and production in MY 2011/12 are estimated lower at 755,000 hectares and 470,000 tons, respectively.

Amid a general slowdown in rabi oilseed planting, peanut planted area was notably up 4 percent over last year. Thanks to strong market prices for peanuts since the start of the rabi season, farmers planted an additional 34,000 hectares spread across Karnataka, Odisha and Tamil Nadu, bringing the total area under peanuts to 913,000 hectares. Based on preliminary estimates, total peanut acreage and production for 2011/12 are estimated at 5.2 million hectares and 5.2 million tons respectively.


Lower rabi oilseed area has reduced the net availability of oilseeds for crushing into edible oils. Based on the current pace of imports, total edible oil imports for MY 2011/12 are expected to increase 11 percent to 9.1 million tons. The import forecast includes 7.1 million tons of palm oil, 1 million tons each of soybean and sunflower oils and 400,000 tons of other edible oils. Strong domestic demand will further support edible oil imports despite imports turning costlier due to devaluation of the Indian rupee against the U.S. dollar.

Post July 2011, international vegetable oil prices had started to soften, leading to a spurt in edible oil imports, particularly during the last quarter of MY 2010/11. The trend extended further into the first trimester of MY 2011/12, when imports were up 5 percent at 3 million tons. Strong international soy oil prices had dragged down imports, while lifting competitively priced palm and sunflower oil. With palm oil selling at a discount to soy and sunflower oils, its import during first four months of MY 2011/12 was up 4 percent at 2.4 million tons. A stabilized exchange rate could partially aid further growth of imported vegetable oils.

India: Imports and Landed Price for Crude Soy, Sunflower and Palm Oils, In U.S. Dollars per Metric Ton

Poor Off-take from Asian Countries Hurting Indian Oil Meal Exports

Poor off-take of oil meals from China, Vietnam, South Korea and Middle East countries since the beginning of this year has resulted in a decline of India’s total oil meal exports in MY 2011/12 to 2.2 million tons. Oil meal exports in January 2012 saw the steepest decline, of 16 percent, to 520,599 tons as compared to the corresponding month last year. Normally, the first 6 months of the marketing year are crucial for meal exports as more than 60 percent of total oil meals get exported during this time period. Post March, competition from Latin American supplants oil meal exports from India. Given the current pace of exports, total oil meal exports [1] are likely to drop 8 percent to 5.3 million tons. The export forecast consists of 4.4 million tons of soymeal, 900,000 tons of rapeseed meal and 10,000 tons of other oil meals. Strong domestic demand for oil meals for feed and food use will constrain additional meal exports.

Further, devaluation of the Indian rupee by 5 percent relative to the U.S. dollar in last 4 months has cut profit margins of Indian oil meal exporters. Though competitive pricing of Indian rapeseed meal has helped exporters sell an additional 44,000 tons during the first four months of MY 2011/12, China’s ban on import of oil meals (rapeseed meal) from India since January 2012 will moderate rapeseed meal exports. Assessing the impact of the recent ban, the Solvent Extractors Association of India anticipates export earnings from oil meals will decline $6 million through MY 2011/12.

India: Exports and International Prices for Soymeal and Rapeseed Meal FOB Indian Port In U.S. Dollars per Metric Ton

March 2012

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