The Hindu Business Line : Record global oilseeds crop likely in 2004-05

A FAVOURABLE combination of expanded area of cultivation, anticipated normal weather, absence of disease problem and return of yields to trend levels in major growing origins is expected to result in the harvest of a record crop of oilseeds in 2004-05.

But concerns whether the forecast will materialise remain because of the experience of previous two years. Output could go up by as much as 13 per cent or by 42.6 million tonnes (mt) to a new high of 378.3 m.t, the US Department of Agriculture (USDA) noted with optimism in its latest report. While higher prices are expected to encourage area expansion, it is hoped that production problems encountered by major origins — the US, Brazil and Argentina — in 2003-04 may not recur.

Soyabean will drive the anticipated growth in global oilseeds output next year. The US alone is likely to harvest about 16 mt additional soyabeans. The latest assessment has put the US soyabean crop to be harvested by October at a new high of 81 mt, with yield expected to be 2.69 tonnes per hectare representing a 20 per cent increase from previous year's drought and pest reduced crop of 65 mt. The crop size for Brazil is placed at 66 mt. (54 mt) with yield slightly below trend of 2.81 t/ha. For Argentina, the crop forecast is 39 mt (34 mt) from a rising yield. Both China and Canada, two other major producers are also expected register notable increases in production of groundnut, soyabean and rapeseed. The global vegetable oil market is expected to take cognisance of these forecasts of a major surge in production. Since the USDA report of May 2004, world vegetable oil prices led by soyabean oil have fallen by 15-20 per cent. Decline in soya oil has impacted the palm complex too which has moved in tandem. It could, however, be too early to celebrate a big crop. The 2002 and 2003 seasons also started with great optimism about the crop size and high forecasts. The actual turnout of crop size was disappointing because of weather problems and pest attacks. While actual users lost out, speculators had a field day.

The next crop is at least four months away during which period the market will be almost entirely weather-driven. The forecast of record crop next season may have helped take attention away from the existing tightness in supplies. But the demand-supply fundamentals till the new crop is harvested cannot be ignored. Any weather scare over the coming months can rapidly lead to a change of sentiment. For instance, this correspondent was privy to talk among farmers in Illinois about planting more corn than soyabean because of thunderstorms experienced in the area early this month.