India's Monsoon Oilseeds Output May Decline on Deficient Rains

By Pratik Parija and Thomas Kutty Abraham

July 14 (Bloomberg) -- India, the world's biggest vegetable oil buyer after China, may produce less oilseeds as dry weather in the biggest growing regions reduced planting, likely boosting overseas purchases of cooking oils.

Output may be less than 16.8 million metric tons produced last year, Govindlal G. Patel, director of Dipak Enterprises, said in an interview today. Patel, 69, has been trading the commodity for more than four decades.

India, battling the fastest inflation in 13 years, needs to bolster cooking oil supplies to cool prices before next year's general election. Increased imports by the country may support prices of palm and soybean oils which reached records this year.

``As on today, the picture as far as oilseeds are concerned cannot be considered satisfactory,'' Patel said by phone from the western Indian city of Rajkot. ``This may affect production.''

India's edible oil imports rose 13 percent to 3.09 million tons in the eight months ended June from a year ago, the Solvent Extractors' Association said today. Average monthly purchases may total 550,000 tons in the July-October period, compared with 300,000 tons bought in April and May, Patel said on July 4.

Rains have been below average so far in Maharashtra, India's second-biggest soybean-grower, and in southern states of Andhra Pradesh, Karnataka and Tamil Nadu, the main producers of peanuts, according to the India Meteorological Department.

``We don't see any chances of monsoon's revival at least in the next four to five days'' over the western and southern areas, A.B. Mazumdar, deputy director general at the state-owned weather office, said in a telephone interview from Pune.

Sowing for the monsoon crop, which provides more than 60 percent of oilseed output, begins in June. Harvesting starts in mid-September.

Deficient Rains

The June-September monsoon rains, which account for four- fifths of the nation's annual rainfall, was 20 percent less than normal in the week ended July 9, with showers being deficient in 22 of 36 weather divisions, the weather office said last week.

Rainfall in July, which accounts for a third of the four- month season, will be 98 percent of the average 293 millimeters, the agency said June 30.

Peanuts were sown on 2.45 million hectares so far, less than the 2.6 million hectares, the farm ministry said July 11. Soybean has been sowed across 5.4 million hectares, compared with 4.4 million hectares a year earlier.

``We're keeping our fingers crossed as far as peanut output is concerned,'' said Davish Jain, president of the Central Organization for Oil Industry and Trade, India's biggest grouping of oilseed processors. ``Even if there's a bit of delayed sowing because of less rains, overall acreage may still be higher than last year because of good prices that farmers received.''

To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net.