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


06 March 2013

USDA GAIN: India Oilseeds and Products Update - March 2013USDA GAIN: India Oilseeds and Products Update - March 2013

Favorable weather and strong MY 2012/13 oilseed prices encouraged farmers to plant an additional 300,000 hectares, bringing the total oilseed area to 8.1 million hectares. Edible oil imports are expected to increase 11.3 percent to 10.1 million tons to meet rising demand for vegetable oils. During the same period, total oil meal exports (not including rice bran and castor meal) are expected to drop 4 percent to 5.4 million tons as strong domestic demand for oil meal, coupled with increasing competition from Latin America, will likely reduce Indian oil meal exports.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Strong Prices and Favorable Weather Conditions Encouraged Higher Rabi Planting

A late monsoon delayed rabi (winter) planting, but optimal sub-soil moisture conditions facilitated planting. Favorable weather during the critical planting period (October-November), coupled with strong market prices, encouraged farmers to plant an additional 300,000 hectares for rapeseed-mustard, sunflower, and peanut crops, bringing the total oilseed planted area to 8.1 million hectares. A prolonged cold wave/frost in northern and north western India during first two weeks of January 2013 caused some damage to the standing crop of vegetables, oilseeds (rapeseed-mustard) and pulses (gram and pea). The extent of the damage is not yet known.

Rapeseed-mustard planting increased 140,000 hectares to 6.7 million hectares. An increase in the Minimum Support Price (MSP) for rapeseed-mustard by Rs 500 to Rs 3,000 a quintal for the 2013-14 marketing season encouraged higher planting. Based on the initial crop assessment for marketing year (MY) 2012/13, rapeseed-mustard production is expected to reach 6.8 million tons, an increase of 600,000 tons from the previous year.

Favorable winter rains and increased planted area in Karnataka has pushed sunflower acreage to 513,000 hectares, up 57,000 hectares from last year. As a result, total sunflower acreage and production in MY 2012/13 are estimated higher at 800,000 hectares and 700,000 tons, respectively. Higher peanut planting in Karnataka, Andhra Pradesh and Odisha also increased the peanut planted area by 100,000 hectares, bringing the total area under peanuts to 900,000 hectares. Based on preliminary estimates, total peanut acreage and production for MY 2012/13 are estimated at 4.9 million hectares and 4.7 million tons respectively.

Edible Oil Imports to Rise 11.3 Percent to 10.1 Million Tons

The increase in rabi oilseed area should increase the availability of oilseed for crushing into edible oils, however, domestic edible oil production continues to fall short of growing consumer demand for vegetable oils. Based on current trends, MY 2012/13 edible oil imports are expected to increase 11.3 percent to 10.1 million tons. The import forecast includes 7.8 million tons of palm oil, 1.2 million tons of soybean oil, and 1.1 million tons of sunflower oil. The depreciating value of the Indian rupee relative to U.S. dollar has made imports more expensive.

Since January 2012, palm oil has become generally cheaper relative to other soft oils, leading to spurt in New Delhi MY 2011/12imports. During the first trimester of MY 2012/13, palm oil prices were competitive and relatively stable, encouraging importers to continue their buying spree. As a result, palm oil imports were up 30 percent, reaching 3.1 million tons notwithstanding a Government of India 2.5 percent import duty (effective January 17, 2013) on crude edible oils, imposed to discourage cheap imports from Malaysia and Indonesia. Over the last 4 months, sunflower oil has been selling at a premium over soy oil. Sunflower oil imports nevertheless continue to grow due to strong domestic demand.

In January, the Government of India issued Customs notification, No.08/2012 (January 23, 2013) announcing a doubling of the tariff on imports of crude edible oils to better align the domestic market with international prices. The duty differential between crude and refined oils has now come down from 7.5 percent to 5 percent, favoring refined imports in subsequent months.

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

Source: Solvent Extractors Association of India

March 2013

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