Domestic oilseed output expected to rise 10%

Edible oil consumers are unlikely to get any breather from an estimated 10 per cent rise in India’s oilseed production this year, as prices of this globally sensitive commodity are forecast to rise in months to come due to a supply shortage worldwide.

Production may rise to 34.6 million tonnes (mt) for 2010-11, against last year’s figure of 31.7 mt. The rise has been market in groundnut and cotton seed.

Vegetable oil production is estimated at 7.6 mt, almost equivalent to the 7.2 mt of last year. This is perhaps for the first time when both, domestic production as well as imports, have a near 50 per cent contribution each to the country’s total estimated consumption of around 15 mt.

As on August 20, the area under kharif oilseed crop showed an increase of about 400,000 hectares (ha) during the week and was at 16.14 million ha compared with 15.32 million ha during the same time last year. In case of groundnut, there was a sharp increase in the acreage in Andhra Pradesh, Karnataka and Tamil Nadu.

In case of soybean, the area in Madhya Pradesh marginally increased by 280,000 hectares. However, Maharashtra has shown a decline. The area under castor seed increased over last year due to the high prices received by farmers, which encouraged them to expand the area.

The progress of the monsoon across India has been favourable and the vulnerability of oilseeds remains low, according to a study by NCDEX. Meanwhile, the US Department of Agriculture lowered its global oilseed production for 2010-11 estimates in August. Global production for 2010-11 is now projected at 439.74 mt against 440.74 mt projected in July.

The gap between global production and consumption is estimated to further tighten in 2010-11 because of moderate production from key producing countries, especially Brazil, where the production is estimated at 68 mt against 71.46 mt last year. Also, production from China and Argentina is expected to come down. At the same time, consumption has shown a northward movement.

Global vegetable oil production for 2010-11 is projected at 146.16 mt, up from 138.92 mt last year. However, the gap between the supply and demand would remain tight.

Palm oil production is projected at 49.34 mt against the 45.75 mt last year. For rapeseed oil and soybean oil, the production is projected at 40.82 mt and 21.95 mt against 38.06 mt and 22.3 mt respectively, as seen last year.