India's mustard output seen rising for the first time in 3 years

By Sankalp Phartiyal

NEW DELHI (Reuters) - India's mustard output is expected to grow for the first time in three years this season, government estimates show, as falling temperatures, light rains and the absence of crop-damaging frost raise farmers' hopes after two years of drought.

Early projections by the six biggest producing states, which account for more than 80 percent of the oilseed's output, indicate a gain of about 15 percent in output. That is not, however, expected to eat into India's vegetable oil imports, which will continue to rise as the population expands.

Edible oil traders have been awaiting for news on India's output of mustard - also loosely referred to as rapeseed by the government - to better asses near-term demand, particularly after a warmer-than-average start to the winter season had delayed sowing and threatened output.

Indian futures of mustard or rapeseed fell on Monday to their lowest level in nearly nine months on prospects of a bumper harvest.

Already, flowering of mustard is up by 10-15 percent this year from last year, according to the Solvent Extractors' Association of India.

"The mustard crop is likely to turn out well if there is no frost in the next 10 to 15 days," said Inderjeet Singh, a farmer from Rajasthan, India's top mustard producing state.

The western state's output could rise 21.4 percent to 3.5 million tonnes in the planting season that began on Oct. 1, up from a low base the previous year when hail and rains damaged crops.

Production for other main states such as Haryana, Uttar Pradesh and Punjab are likely to grow 7-32 percent, according to estimates from their agriculture departments.

Central India's Madhya Pradesh, however, is predicting a 6 percent fall as farmers in many of its districts delayed sowing due to a lack of soil moisture.

Drought caused India's 2014/15 mustard production to fall 23 percent to 5 million tonnes. This year's estimate from the top producing states alone is 6.17 million.

Despite the higher mustard output, India's imports of vegetable oils are still expected to rise.

The world's biggest importer of vegetable oils spends more than $10 billion a year on such purchases. This year the imports may rise as much as 11 percent to a record 16 million tonnes in the 2015/16 marketing year that started on Nov. 1, according to estimates from a Mumbai trade body.

(Reporting by Sankalp Phartiyal; Editing by Tom Hogue)