India's rapeseed output seen falling, Indonesia to gain

Traders say India's rapeseed output could fall a tenth in 2014-15 as farmers sowed the main winter oilseed crop on a smaller area

The world's biggest palm oil producers, Indonesia and Malaysia, are set to benefit from an imminent fall in rapeseed output in India, a top industry body said on Wednesday.

"An incremental rise in overseas purchases due to a fall in local rapeseed oil output would be bridged by rise in palm oil imports," B.V. Mehta, executive director of the Solvent Extractors' Association, told Reuters.

India imports palm oils mainly from Indonesia and Malaysia.

In 2013-14, its palm oil imports fell for the first time in four years.

Traders forecast India's rapeseed output could fall a tenth in 2014-15 as farmers sowed the main winter oilseed crop on a smaller area than the previous season because of poor soil moisture in the main growing areas.

That could lead to higher imports of edible oils to India, the world's leading buyer, in the current marketing year that began in November and might support benchmark Malaysian palm oil futures, which have dropped by a fifth this year.

Traders expect rapeseed output to drop to 7.0 million tonnes in the 2014-15 crop year (July-June) from 7.4 million last year.

The planted area is forecast to drop by 6 percent to 6.7 million hectares (16.6 million acres) from 7.1 million hectares.

Rapeseed oil supplies could fall by 11 percent to 2.4 million tonnes in 2014-15 from the previous year, when ample monsoon rain helped the oilseed crop.

"Rapeseed output will depend on how the temperature prevails in the next six to seven weeks," said Govindbhai G. Patel, managing partner of G G Patel & Nikhil Research Co.

Rapeseed needs damp condition for sowing and this year's poor monsoon in the northwest, including the main growing state of Rajasthan, led to the fall in planted area.

Sandeep Bajoria, chief executive of the Mumbai-based Sunvin Group, said local rapeseed oil supplies could be fall by 300,000 tonnes in 2014-15.

India's edible oil imports rose for the third year in a row to 11.6 million tonnes, estimated at $10 billion, in the year to October due to a surge in soy and sunflower oils. But palm oil, the main contributor to the edible oil import basket, fell for the first time in four years.

India meets 60 percent of its 18-19 million tonnes of annual edible oil demand through imports.