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


15 October 2012

USDA GAIN: India Oilseeds and Products Update- August 2012USDA GAIN: India Oilseeds and Products Update- August 2012

Extended dry weather conditions through the middle of July impeded timely planting of kharif crops while earlier anticipation of favorable returns encouraged farmers to expand area to soybean (10.6 million hectares) and sugarcane with relatively less interest in coarse grains and pulse crops. Based on current trends in vegetable oil and meal trade, edible oil imports are forecast at 9.7 million tons, and oil meal exports are projected at 5.4 million tons in marketing year (October-September) 2011/12.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Record Soybean Planting Amid Fear of Drought

According to the latest planting progress report from the Government of India (GOI) Ministry of Agriculture, kharif (fall and early harvested) oilseeds(soybean, peanut and sunflower) were planted on 14.3 million hectares, down 220,000 hectares from the corresponding period last year. Extended dry weather conditions through the middle of July had impeded timely planting of kharif crops and discouraged farmers from expanding area, fearing seeds would not have enough moisture to germinate. In the kharif 2012 season, late receipt of rainfall had a negative effect on planted area of rice, pulses, peanuts, sunflower and coarse grains, while earlier anticipation of favorable returns encouraged farmers to expand area to soybean and sugarcane.

The MY [1] 2012/13 soybean planted area reached an all-time-high of 10.7 million hectares [2], up 367,000 hectares from last year. Late arrival of monsoon rains over major soybean growing regions recouped the much-needed soil moisture and encouraged late planting, extending at some places till the end of July. Strong domestic prices (50% higher than the corresponding period last year) of soybeans were an additional incentive for expanding area to soybeans. Based on preliminary field assessments, 2012/13 soybean production is forecast at 11.1 million tons, marginally higher than last year, but down 0.4 million tons from Post’s previous estimate (please see GAIN Report IN2048). Lower average yield due to late planting will be partially offset by the gain in planted area. Industry observers believe that recent heavy rains in western Madhya Pradesh may negatively affect plant growth if rains don’t recede within a week.

Deficit monsoon rains in major sunflower growing regions (Karnataka and Maharashtra) influenced a shift to cotton, sugarcane and soybean production, reducing the 2012 kharif season sunflower planted area to 148,000 hectares, down 44,000 hectares from kharif 2011. Over the last five years, sunflower acreage has come down by 600,000 hectares due to recurrent production losses on account of a host of biotic and abiotic factors. Assuming normal growing conditions during the 2012 rabi (winter sown) season, total sunflower area and production for MY 2012/13 are forecast lower at 600,000 hectares and 550,000 ton respectively. Sunflower production was higher in 2011/12 (620,000 tons from 745,000 hectares) due to higher returns from other technical crops.

Compared to last year, kharif peanut planting is also down 13 percent at 3.5 million hectares. All states reeling under acute moisture stress shifted from peanuts to other short-duration remunerative crops. Until mid-August Gujarat had received 40 percent of its normal rainfall while Karnataka and Maharashtra were slightly better at 70 percent. With Gujarat being the worst hit among peanut growing states, farmers there shifted to guar, vegetables, forage and coarse grains, as a result of which peanut acreage in Gujarat slipped 15 percent to1.2 million hectares. Overall, kharif peanut planting is down 13 percent at 3.5 million hectares [3]. Based on preliminary estimates and assuming normal rabi planting, total 2012/13 peanut area and production are forecast at 4.5 million hectares and 4.4 million tons, compared to 5.3 million hectares and 5.5 million tons in 2011/12.

Edible Oil Imports in 2011/12 Will Rise to 9.7 Million Tons

Total vegetable oil imports in the first three quarters of 2011/12 were up 25 percent at 7.1 million tons (Table 1). Based on current vegetable oil import trends, and the domestic availability of oilseeds for crushing, total edible oil imports are likely to rise to 9.7 million tons in 2011/12, up 17 percent from last year. The import forecast includes 7.3 million tons of palm oil, 1.2 million tons each of soybean and sunflower seed oil, and 5,000 tons of other edible oils.

Strong international prices for vegetable oils [4] in the first five months of 2011/12 (Figure 1) had slowed the pace of import but didn’t discourage import of costlier oils (sunflower oil) due to strong domestic demand. Since February 2012 landed prices for vegetable oils have started to soften, encouraging imports of relatively cheaper oils.

With palm oil selling at a discount to both soy and sunflower oil, its imports in the first three quarter of 2011/12 were up 16 percent to 5.3 million tons. Taking advantage of a lower export duty on refined palm oil from Indonesia, Indian importers doubled imports of refined palm oil to 1.3 million tons. Industry observers believe the volume of refined palm oil could go up to 1.8 million tons by the end of 2011/12. Starting August 14, 2012, the government of India (GOI) revised the tariff on RBD palmolein from $484 per metric ton to $1,022 per metric ton so as to be in line with current market prices. Anticipating a rise in consumption demand vegetable oil imports in 2012/13 could surpass 10 million tons.

India: Imports And Landed Prices Of Crude Soy, Sunflower and Palm oils

Source: Solvent Extractors’ Association (SEA) of India and Industry Sources

Oil Meals

Oil meal exports in the first three quarters of 2011/12 were down 10 percent at 4.2 million tons (Table 2). Both soymeal and rapeseed meal accounted for the largest share in oilmeal exports. Subdued overseas demand, negative margins for crushing oilseeds locally has depressed oilmeal exports from India. Based on current trends, the oil meal export forecast excluding castor and rice bran meal for 2011/12 is estimated at slightly over 5.4 million tons: 4.4 million tons of soymeal (high sea sales), 1 million tons of rapeseed meal and 1,000 tons of other meals.

On August 21, 2012, the government issued a customs notification No. 47/2012, exempting from import duty meal of soy, peanut, sunflower, canola and mustard. This will augment domestic availability of feed for livestock and poultry sectors, and encourage its domestic utilization without cutting into exports. Post’s oilmeal export forecast for 2012/13 remains unchanged at 5.5 million tons. However, if China were to lift their import embargos on Indian oilmeals, total oilmeal exports in 2012/13 would be marginally higher than 2011/12 sales.

October 2012

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