New Delhi: Oilseed output in the country may decline this year as dry weather in Rajasthan, the nation’s biggest mustard-grower, curbs winter plantings, further boosting purchases of alternatives such as palm oil.
With the planting season ending in a week’s time, farmers in Rajasthan have sowed 40% less area to mustard oil seed than targeted because of scant rains, said Pannalal Agyat, chief statistical officer at the state’s agriculture ministry. Lower production may force India to buy more palm oil from Malaysia and Indonesia, likely supporting prices of the tropical oil that reached a record last week.
Mustard oil is the third most used oil in India and accounts for more than 70% of the nation’s output of winter-sown oilseeds.
“A shortage in the mustard seed harvest may increase imports at a time when global vegetable oils supplies are tight,” M. Somasekhar, an analyst at TransGraph Consulting, which advises commodity traders, said on Tuesday.
Oily path : Lower production of mustard may force the country to buy more palm oil from Malaysia and Indonesia.
Palm oil for January delivery, the most active contract, fell 0.4% to 2,912 ringgit ($871) a tonne on the Malaysia Derivatives Exchange on Wednesday. Futures reached a record 3,013 ringgit on 9 November. Prices may reach 3,300 ringgit in two months, Somasekhar said.
Prices of mustard seeds for immediate delivery have risen 20% in the past six months on the National Commodity & Derivatives Exchange in Mumbai.
Farmers in Rajasthan sowed 1.61 million ha to mustard as of 13 November. That’s 37% less than a year earlier, said Agyat. Rains in the state’s growing area were 15% below normal in the June-September rainy season.
“Looking at the sowing pattern, I think we could go up to 2.2 million ha by end of the season,” short of the 2.7 million ha target set by the state, he said. “Some farmers are shifting to gram and wheat,” lured by higher prices.
A smaller crop area may cut the nation’s mustard harvest by between as much as 20% from 7 million tonnes (mt) a year earlier, said Devi Prasad Khandelia, managing director of Khandelia Oil & General Mills Pvt., an oilseeds processor. India’s edible oil imports rose 11% to 4.21mt in the 11 months ended 30 September from a year earlier, the Solvent Extractors’ Association, a trade body, said on 15 October. Crude palm oil imports rose 32% to 2.62mt in the period from a year ago.