India's oilseed glut threatens vegetable oil imports
Monday, 31 May 2010
NEW DELHI, May 30 (Reuters): : India's record large oilseed stockpile looks set to finally dribble into the market in the next few months as forecasts for normal monsoon rains prompt speculators to release stocks, and reduce vegetable oil imports.
India, the world's biggest importer of edible oil, still has about 70 per cent of this year's oilseed output of around 26 million tonnes to process, but crushing will pick up from June as forecasts of ample rains promise plentiful supply next year.
Higher oilseed crushing in the third quarter, usually India's peak edible oil import season, will limit the need for overseas purchases and possibly have a bearish impact on benchmark Chicago soyoil and Malaysian palm oil markets.
"Import numbers have started dwindling and with the monsoon expected to arrive on time, definitely oilseed stocks stored in the country will start coming out," said Sandeep Bajoria of industry group the Central Organisation of Oil Industry and Trade.
India typically finishes crushing two-thirds of its domestic oilseeds harvest by April, relying mainly on imported cargoes in the second and the third quarters. But this year will be different.
Traders said India's edible oil imports - chiefly palm oil from Southeast Asia and soyoil from Latin America - could slide to 1.5 million to 1.6 million tonnes in the period from July to September, down 20 to 25 per cent from a previously estimated 2 million.
Impact of timely monsoon: "Normally, most of the crushing takes place in the first six months of the season, but this year we have a lot of stock which will be crushed now," said one vegetable oil trader based in Mumbai, the country's financial capital.
"The oilseed availability will be higher during off season if the monsoon starts on time as traders who are holding stocks will start liquidating."
Monsoon rains vital for India's trillion-dollar economy this week hit the Andaman and Nicobar islands, touching the first landmark in their June-September progress northwards.
Weather forecasts indicate the monsoon will reach the state of Kerala on the country's southern tip by May 30, two days sooner than usual.
Last year, India reclaimed its position as number one edible oil importer, with purchases up 35 per cent at a record 8.4 million tonnes. India's vegetable oil imports rose 9 per cent to 2.4 million tonnes in the period from November to January, largely driven by rising consumption, a strengthening rupee currency and a fall in the output of rapeseed, the main winter-planted oilseed.
India, the world's biggest importer of edible oil, still has about 70 per cent of this year's oilseed output of around 26 million tonnes to process, but crushing will pick up from June as forecasts of ample rains promise plentiful supply next year.
Higher oilseed crushing in the third quarter, usually India's peak edible oil import season, will limit the need for overseas purchases and possibly have a bearish impact on benchmark Chicago soyoil and Malaysian palm oil markets.
"Import numbers have started dwindling and with the monsoon expected to arrive on time, definitely oilseed stocks stored in the country will start coming out," said Sandeep Bajoria of industry group the Central Organisation of Oil Industry and Trade.
India typically finishes crushing two-thirds of its domestic oilseeds harvest by April, relying mainly on imported cargoes in the second and the third quarters. But this year will be different.
Traders said India's edible oil imports - chiefly palm oil from Southeast Asia and soyoil from Latin America - could slide to 1.5 million to 1.6 million tonnes in the period from July to September, down 20 to 25 per cent from a previously estimated 2 million.
Impact of timely monsoon: "Normally, most of the crushing takes place in the first six months of the season, but this year we have a lot of stock which will be crushed now," said one vegetable oil trader based in Mumbai, the country's financial capital.
"The oilseed availability will be higher during off season if the monsoon starts on time as traders who are holding stocks will start liquidating."
Monsoon rains vital for India's trillion-dollar economy this week hit the Andaman and Nicobar islands, touching the first landmark in their June-September progress northwards.
Weather forecasts indicate the monsoon will reach the state of Kerala on the country's southern tip by May 30, two days sooner than usual.
Last year, India reclaimed its position as number one edible oil importer, with purchases up 35 per cent at a record 8.4 million tonnes. India's vegetable oil imports rose 9 per cent to 2.4 million tonnes in the period from November to January, largely driven by rising consumption, a strengthening rupee currency and a fall in the output of rapeseed, the main winter-planted oilseed.